A glance at fraud statistics would seem to yield an obvious answer: the United States needs to catch up with the rest of the world and upgrade old-school magnetic stripe cards to modern chip and PIN models.
David Mattei, vice president of product management for Fifth Third Processing Solutions, noted 45% of worldwide credit card fraud is transacted on U.S.-issued cards, and 40% of the transactions are at U.S. locations. “This is because of magnetic stripe cards,” Mattei told attendees of the National Association of Federal Credit Union’s Technology & Security Conference in Las Vegas. “The United States is one of the last holdouts in adopting chip and PIN cards.”
The reason the changeover has not happened is simple, Mattei explained: it would require replacing every merchant terminal in the country, and every card would have to be reissued. Because of the costs involved in such an undertaking, he predicted it will not happen. “A newer technology will emerge that will be the new standard here, but you won’t see a switch to chip and PIN cards.”
Besides, Mattei told Credit Union Journal, chip and PIN cards are not infallible. European cards are not completely safe, they are compromised in different ways, he said. “If 45% of fraud involves U.S.-issued cards, that means 55% of fraud involves other cards. You still see fraud in Europe. Chip and PIN cards are not a panacea.”
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