President Barack ObamaBarack ObamaDNC 'applauds' Obama investigation into Russian hacking Biden: Trump will not undo most climate change policies Donald Trump will be president — but a President Trump may not be what voters expected MORE has declared this week National Consumer Protection Week, and his proclamation comes not a moment too soon. Millions of Americans have already felt the effects of a data breach, and threats of fraud and identity theft exist for everyone, everywhere. Currently, the United States accounts for almost half of all card fraud worldwide due to outdated payment card technology that is putting us at unnecessary risk.
America’s retailers are working with Obama to lead the shift toward a more secure standard of payment for all Americans: “chip-and-PIN” card technology.
Two essential security features help make “chip-and-PIN” cards safer. First, the magnetic stripe – found on most cards issued by U.S. financial institutions today – is replaced by an embedded chip. The chip provides a more secure method of storage for the cardholder’s personal data and randomizes transaction information each time a purchase is made.
The second step, entering a PIN or personal identification number for each purchase, is just as essential. Instead of a signature that a thief could potentially reproduce, PINs remain known to the cardholder alone, rendering the card virtually useless if stolen. In a study of PIN use with debit cards, the Federal Reserve noted that entering a PIN could make transactions safer by as much as a 700 percent margin.
Why is it so imperative to implement “chip-and-PIN” technology? Simply put, the current system is broken. Magnetic-stripe card technology dates back to the 1960s and has hardly changed at all since its introduction. Our reliance on these plastic anachronisms has real consequences: security analysts at Trend Micro have blamed magnetic stripe cards for exacerbating data breach damage in the United States.
The American people agree that it’s time for a change. In a poll conducted last November, in a year packed with cyber-attacks across the country, over 80 percent of U.S. cardholders were supportive of “chip-and-PIN” technology. Moreover, more than half of cardholders reported they would actively change banks for the benefit of using a “chip-and-PIN” card, despite the fact that most U.S. banks still issue magnetic-stripe cards or chip cards without the PIN security feature.
U.S. retailers, together with the federal government, are collaborating to give Americans the international standard of card security they deserve. The government is currently transitioning to issuing “chip-and-PIN” cards and accepting them at federal facilities. As President Obama pointed out in his official National Consumer Protection Week proclamation, “you should be able to visit our National Parks or use the Postal Service without risking your identity.”
Retailers feel you should also be able to shop at your favorite store without decades-old technology putting you at risk. Stores all over America will be spending about $30 billion in order to update our payment kiosks, cash registers and other points of sale so they will be able to accept “chip-and-PIN” cards.
Banks and credit unions, however, will need to make a contribution as well and issue the “chip-and-PIN” cards for consumers to use. Each “chip-and-PIN” card would cost approximately $3 more for them to issue. In the spirit of National Consumer Protection Week, America’s financial institutions should consider whether a few extra dollars are a sacrifice worth making for their customers’ security; otherwise, they might just see their customers take their business elsewhere.
Kennedy is the president of the Retail Industry Leaders Association (RILA).