New credit cards coming to US to reduce fraudPosted: Updated:
The United States is considered the world capital for credit card fraud. Nearly half of all businesses last year reported being exposed to it.
Massive breaches at stores like Target and Michaels have tens of millions of consumers more concerned than ever. Criminals get the information by hacking stores or ripping information straight off the magnetic strips.
But change is on the way.
The U.S. credit card industry is going to start issuing cards with microchip technology.
"The strip that we have on current credit cards is very antiquated, and really, criminals can and do access this information and are able to reproduce it and literally put it on a hotel room key," said Harry Jacobs, chief executive officer of Credit Restoration of Nevada.
Microchip card technology has been around since the '90s. Europe and Canada have both adopted it, and fraud subsequently dropped about 80 percent in some cases.
"In many cases, we're the laughing stock of the world because of the fact the chip technology hasn't been mandated. But look at what happens. Canada's theft issues went down exponentially," Jacobs said.
Reports show fraud losses in Canada went from $142 million in 2009 to $29.5 million in 2013.
Seventy-five percent of those losses in 2013 came from Canadians using their cards in non-chip transactions in the United States.
Americans may soon benefit from this technology as well.
EMV cards - which stands for Europay, MasterCard and Visa - are coming.
Jacobs said, so far, there have been no hacks on EMV systems worldwide.
They have embedded microchips in them which generate unique codes for each transaction, making it hard for criminals to counterfeit.
"Instead of sliding the card, you need to take it into the machine to read the chip, to make sure there's no fraud being placed on this card," said Kenneth Einiger, president of Global 1 Wholesale Merchant Services.
Global 1 Wholesale Merchant Services processes credit card transactions for more than 3,000 businesses in the Las Vegas Valley.
Einiger's technicians are already installing the new EMV-enabled machines at points of purchase, including the New York Chinese Restaurant on Green Valley Parkway.
He says it is time to get the ball rolling, but some companies say they'll believe it when they see it.
The credit card industry set an October 2015 deadline for card issuers and merchants to make the switch. If they don't, fraud losses become their responsibility.
"What will happen is MasterCard and Visa will go after the weakest link, and that's the merchant," Einiger said.
Target said it will have chip readers in all stores by September. Some are already making the upgrade. The company will reissue chip cards and pins for added security.
More than 8 million merchants in the U.S. accept credit card payments. They'll all have to switch their technology, which costs about $450 on average, per machine.
It costs banks about 10 times more to issue microchip cards than traditional credit cards.
Experts say the initial cost could save billions in fraud losses down the road.
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