We're still doing it wrong. How on earth, in the year 2013, nearly seven years after the record-setting TJX breach, can a retailer suffer a credit card breach that actually compromises user account numbers?
And yet here we are, witnessing Target scurrying to make things right after announcing that some 40 million customers' credit and debit card data had been illegally accessed in what amounts to the second-biggest credit card security breach in U.S. history. While there are doubtless many problems that led to this breach, at least much of the culpability must rest on the fact that we're using ancient payment card technologies here in the U.S., whereas the rest of the world has long ago eclipsed us with more modern tech.
Almost all of the burden for this, of course, falls on the side of the merchants and the payment card issuers/processors. But we consumers also need to pull our weight and demand more modern systems from our providers.
So let's consider the issues from two perspectives: 1) the merchant side and 2) the customer endpoint, at least for online purchases.
First, the merchant side, since that's what was compromised in the Target breach. Our best hope for ending this type of wide-scale breach that harvests millions of account numbers is the Europay Mastercard Visa (EMV), cards used throughout the world — except for here in the U.S.
While certainly not perfect (as a group of researchers at Cambridge University discovered a couple of years ago), EMV, or "chip and pin" cards, have one massive advantage over the magnetic stripe system used in the U.S.: The merchant does not gain access to the customer's account number. Since that number doesn't leave the customer's card, massive system compromises should never result in the harvesting of millions of card numbers.
Unfortunately, EMV cards are not yet commonly available in the U.S. Things could be changing, since some U.S. banks are offering them, and during my holiday shopping this year, I did see two vendors whose point-of-sale terminals had chip-and-pin slots. I've used EMV on my overseas travel. I hope a lot more U.S. residents have experienced them as well and will create a groundswell for widespread U.S. adoption.
Now for the consumer perspective. I know that most people have done more online shopping over the past month than they did in the 11 months before that, but there are things we can do year-round to protect ourselves while shopping.
For starters, ask your credit card issuers if they support EMV cards, or what their rollout plans and timeline are. The card issuers need to hear a solid message from us consumers that we're fed up with magnetic stripe systems that are so trivially compromised.
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