Over the last few years, large retailers have become increasingly vulnerable to attacks by hackers looking to steal important company and customer data. In order to prevent these breaches, stores across the nation are upgrading to new credit card readers that scan an embedded chip rather than the card’s magnetic strip. Each transaction on a chip-card receives its own unique code, making shopping safer for consumers and companies alike. 575 million of these new cards are expected to land in American wallets by the end of the year, accounting for three-quarters of U.S. credit cards and 40 percent of debit cards.
While issuing these new cards hasn’t presented many problems for big banks, installing machines that can read them has been less successful. So far only a few major chains have upgraded their payment terminals to accept the chip-scanning cards. Along with Walmart, Target plans to start accepting chip-cards in the spring. The retailer previously endured a huge data breach in 2013, making the company understandably eager to improve their security. However, few stores around the country have followed their example. These reluctant retailers run the risk of missing an October deadline that will shift liability for fraudulent transactions from card-issuing banks onto the stores themselves.
Although a trade group representing thousands of retailers has asked for an extension until next year, credit card companies don’t appear to be budging. Perhaps that’s because the U.S. is already far behind the curve when it comes to chip-card technology. After all, retailers throughout Europe, Asia and Canada have depended on the cards for years. Meanwhile, American outlets kept putting off the expense of upgrading, which could now come back to bite them. Retailers aren’t the only ones having problems with the new cards, though. Many small banks say they won’t be able to complete the jump from strip to chip-cards until next year due to manufacturing costs. Indeed, making a chip-card costs as much as five times more than a traditional one, leading to expenses of millions of dollars for even the smallest banks. But when the alternative to inaction is a potentially pricier hack attack, it’s advisable simply to bite the bullet and upgrade sooner rather than later.
- Why has the U. S. lagged behind other nations in implementing chip-cards?
- Is making retailers liable for fraudulent transactions better for consumers?