Breaches of personal card data are on the rise. It is time to expand the debate about how smart card technology could play a greater role in providing security to bank cards and payment networks here in the United States.

Properly implemented, the chip, payment terminal, and network can interact to prevent card cloning and add other transaction security features. This makes stolen card account information nearly useless to criminals at the point of sale.

France, Germany, the United Kingdom, Japan, and many other countries have plans to migrate to smart bank cards. Canada, Mexico, Brazil, and the rest of Latin America are now starting to migrate to chip cards.

Many of us in the smart card community have predicted fraud would eventually migrate to countries where criminals can still clone and use magnetic stripe cards. Unfortunately, the United States is one of them.

Undercover researchers for Symantec found that criminals who sell stolen card account numbers on the black market charge a premium for U.S. accounts. The researchers found that U.S. accounts complete with a CVV2 code, expiration date, full address, and phone number go for $1.50, while accounts from the United Kingdom, where they use chip and PIN, sell for just $1.

Smart bank cards, based on well-established global standards, could help to prevent card cloning and fraudulent transactions. In the future, smart card technology and integration with payment systems could make online shopping more secure.

In the United States, contactless credit and debit cards are moving us in the right direction. The smart technology in these cards prevents someone from cloning them and adds other countermeasures to protect consumers and issuers against fraud.

It is not obvious that migrating all bank cards to chip makes economic sense for the U.S. payment market, since fraud rates here are still the lowest in the world, but for how long?

Putting chips on U.S. bank cards would impact all the stakeholders in the payment industry and would require significant investments. Issuers would have to buy and personalize the cards. Processors would have to change their networks to support the technology. Merchant terminals would have to be upgraded to use the security features. These investments have to be weighed against the value of the security benefits they will deliver in the near term, especially during the difficult transition years.

The Smart Card Alliance has long been a place where all the stakeholders could come and examine complex questions like this. I encourage our members and other stakeholders in the U.S. payment industry to reconsider the economics — costs and benefits — of chip technology.

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