Identity theft, and especially credit card fraud, have been a not so new plague across this country. Target, Neiman Marcus and P.F. Chang’s have all experienced massive data breaches recently, which resulted in millions upon millions of credit card numbers being stolen. Since then national retailers have been scrutinizing the security measures they have in place, while credit card companies have been reevaluating their own operating procedures.
The major credit card providers have began to embed microchips into their new cards as an added security measure. Before the microchip, credit cards typically worked by scanning the card through a cash register, which would hold the number and then turn it over to the credit card company. If a thief was able to access any step of that process, your data would then become incredibly vulnerable.
The microchip differs from the traditional magnetic strip by generating a brand new transaction number anytime the card is swiped. It is unique to solely that purchase, so if a thief is able to access the number they will be unable to use it at that store or any other location they try. The microchip’s short fall is that the security feature is only effective when used in stores. It unfortunately offers no greater security to online purchases than a regular credit card would.
Security journalist Brian Krebs told NPR that the microchip, “Simply raises the costs for the bad guys…It’s not that they can’t break the system — but it makes it more expensive for them to fabricate these cards.” Still, the new security measure is a much needed improvement.
For those who travel internationally, the microchips will probably look familiar. The most recent credit card security measure is already widely used across the European Union. In fact, the magnetic strip used ubiquitously across the U.S. is rarely used in Europe. Carolyn Balfany, Senior Vice President of Product at MasterCard, told Yahoo Finance, “What people don’t know is that the industry has been working together for about two years to start to affect the migration. And so banks are beginning to issue cards to consumers across the U.S. and retailers are beginning to change out the terminals.”
It’s nice to know that there are some people who are just as interested in protecting your data as others are in stealing it. As of now, the game plan is to have microchips used at least partially across the U.S. The transition to 100% however, will still be a few years down the line.
Photo: Creditlover
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