Adding a PIN is so difficult, eh?
New technology about to be deployed by credit card companies will require U.S. consumers to carry a new kind of card and retailers across the nation to upgrade payment terminals. But despite a price tag of $8.65 billion, the shift will address only a narrow range of security issues.
Credit card companies have set an October deadline for the switch to chip-enabled cards, which come with embedded computer chips that make them far more difficult to clone. Counterfeit cards, however, account for only about 37 percent of credit card fraud, and the new technology will be nearly as vulnerable to other kinds of hacking and cyber attacks as current swipe-card systems, security experts say.
Moreover, U.S. banks and card companies will not issue personal identification numbers (PINs) with the new credit cards, an additional security measure that would render stolen or lost cards virtually useless when making in-person purchases at a retail outlet. Instead, they will stick with the present system of requiring signatures…
Chip technology has been widely used in Europe for nearly two decades, but banks there typically require PINs. Even so, the technology leaves data unprotected at three key points, security experts say: When it enters a payment terminal, when it is transmitted through a processor, and when it is stored in a retailer’s information systems. It also does not protect online transactions.
American corporations inside the retail purchasing loop are perfectly willing to expand that to four key points.
Retailers and security experts say it would make more sense for the United States to jump instead to a more secure system, such as point-to-point encryption. This technology is superior to chip-and-PIN, which first was deployed about 20 years ago, because it scrambles data to make it unreadable from the moment a transaction starts.
But the newer technology would cost as much as twice what the chip card transition will cost…
Moreover, some security experts say that mobile payment services such as Apple Pay, a service from Apple that stores data on the cloud, have the potential in coming years to secure payments without the need to swipe or tap a card at all…
Rick Dakin, who is advising a group of banks on payment security, said no industry standard exists for the newer point-to-point encryption systems, and banks and card companies are hesitant to make large-scale investments before the standards are set.
Apparently, 20 years isn’t sufficient time to adopt standards in the United States.
Banks and card companies said a chip card alone can make stolen data less useful for hackers and the technology has worked in reducing counterfeit card fraud in Europe and elsewhere.
Security experts said the shift cannot prevent massive consumer data breaches of the sort that recently hit Target and Home Depot. But the technology will make it more difficult to use stolen data.
The installation of 15 million payment terminals that can read chip cards in the U.S. will cost approximately $6.75 billion. Banks are expected to spend some $1.4 billion to issue new cards and another $.5 billion to upgrade their Automated Teller Machines according to Javelin Strategy & Research.
Beancounters live and die on hindsight – and this is another case of crap decisions being worthless.
What would this conversion have cost in 1995 dollar$? How many billion$ have been lost to fraud, counterfeit credit cards and identity theft? All it took in the first place was a willingness to make security a priority.