With the recent discussion of increasing consumer privacy and security at POS, there is a renewed interest in smart chip credit cards in the US. Already in use in Europe, the trend has not caught on in the US because of the cost retailers would have to undertake to upgrade their systems. In light of recent security breaches, it is likely that many retailers will see the cost as the price of doing business in the future. So what are the benefits of this new technology?
Unlike credit cards with a magnetic strip on the back, credit cards with smart chips have mini computers stored within the card itself. A personal identification number is required with every purchase, and the customer data cannot be accessed without the PIN. This is vastly different from magnetic cards, which offer up personal data with a signature—even if that signature isn’t the customer’s correct signature.
The challenge of this new technology is the required upgrades that merchants would need to make in order to accept credit cards with smart chips. Existing POS systems can’t handle the technology, and merchants would also have to pay to train cashiers. Despite the costs, the transition to this new technology would pay off for companies that don’t want to risk a breach similar to the one experienced by Target in late 2013.
As hackers and thieves improve their technology, so too must merchants and retailers. Using smart chip credit card processing systems to accept credit cards with this innovative technology could be the first step toward restoring consumer confidence in the US.
