Executive Vice President John Mulligan faced the Senate Judiciary Committee early this year to discuss the data breach that occurred at Target stores at the end of 2013.
From Nov. 27 – Dec. 15, an estimated 40 million Target credit and debit card accounts were breached, compromising customers’ credit and debit card numbers, expiration dates, PIN numbers and codes on the cards’ magnetic strips. Also stolen was non-card personal information (names, phone numbers and email and mailing addresses) for up to 70 million Target customers.
Close up of contacts on а Smart card with signal names (Photo credit: Wikipedia)
“We know this breach has shaken their confidence in Target, and we are determined to work very hard to earn it back,” Mulligan said, apologizing at the start of the hearing.
Hackers infiltrated Target’s Point of Sale systems to obtain this information, а crime that also occurred at Neiman Marcus retailers last year. “The malware was evidently able to capture payment card data in real time, right after а card was swiped, and had sophisticated features that made it particularly difficult to detect, including some that were specifically customized to evade our multilayered security architecture that provided strong protection of our customers’ data and our systems,” Michael Kingston, senior vice president of The Neiman Marcus Group said.
Carte Vitale, smartcard. Assurance maladie. (Photo credit: Wikipedia)
With such prominent retailers and large volume of customers victimized in these malware scams, the fallibility of debit and credit cards has been on many people’s minds. The magnetic strip payment card may be а thing of the past, as the U.S. looks to smart card technology as the secure payment of the future.
Smart cards look like а credit card in size and shape, but the inside of а smart card usually contains an embedded microprocessor. The microprocessor is under а gold contact pad on one side of the card, replacing the usual magnetic stripe on а credit card or debit card. A SIM card inside of а cell phone is а version of а smart card microprocessor that you may already be familiar with.
Europe already uses smart card technology extensively for banking and health care purposes. French pay phones have used the smart card for payment since 1983, and French bank cards have been smart cards since 1992. The United States is actually one of the few countries that has not implemented smart card technology for banking at this time.
With the recent data breaches showcasing the security shortcomings of our current payment cards, and а steady flow of tourism from outside countries, more and more retailers are adapting to accept smart cards as payment.
Stephanie Ericksen of Visa has reported that as of September 2013, 6.6 million EMV chip-enabled Visa cards have been issued in the U.S., and 8 percent of cross border transactions with U.S. issued cards are chip payment cards used on chip-enabled payment terminals.
Walmart has been very proactive in its implementation and has chip-enabled terminals in all of its U.S. stores with 118 stores ready to accept chip transactions. John Drechny of Walmart advocated for the “the elimination of signature as а cardholder verification method.”
No doubt about it, as hackers get smarter, so should our payment cards. Smart cards are the future of US payment, and your ability to receive smart card payment can also open up revenue from tourists who have used the secure payment cards for over а decade in European countries. As you budget for future growth in your sales channels, be sure to keep new smart card payment terminals at the top of your list.
Abουt Melissa Zimmerman
Melissa Zimmerman is а freelance writer with а varied background in e-commerce, real estate, financing, retail, and the health and beauty industry. She draws on these experiences and а never-ceasing passion for learning while perfecting her craft. Melissa lives in Central Oregon, where tech start-ups, microbreweries and outdoor adventures abound.