There are reasons for the current trend of credit card frauds. And just like how millions of cards were stolen from “Target” this will continue to happen in many other places as the payment system of credit cards with the magnetic strip is outdated.
The huge hack at Target proves to us that the US credit card system is out of date US being the financial capital of the world. Many countries around the world have adapted to the credit card with the micro chip but the US insists on the outdated card with the magnetic strip. These strips unlike the micro chip give out all the users’ data without withholding anything. One swipe and we can see everything on a screen. All the hackers have to do is glance at the screen gain all info like your name, credit card provider, card number, expiration date and more, basically steal your card and use it for online purchase or make counterfeit cards.
If the micro chip or PIN credit card system was used by all people it will prevent the hackers from seeing the encrypted code and accessing information. And also to make a counterfeit card the hackers will need the physical chip itself this will reduce hacking drastically as the process of stealing information is harder than when compared to magnetic strip credit cards. The reason millions of credit cards were stolen from “Target” was because information needed could be easily gathered as the safety of the card was compromised.
Credit card fraud in England reduced by 34% as the banks in England implemented the Chip and PIN card system and also it shows that in France as a result of using Chip Or PIN credit cards the credit card fraud has fallen by 35% with by the looks of it the percentage will only increase in coming years.
The Chip and PIN card system doesn’t seem to be taking action in the United States .The card companies can somewhat put a stop to credit card frauds by completely stopping and omitting the use of magnetic strip credit cards. But, the cost of producing micro chip cards are 10 times more expensive so card companies find it cost effective to stick to magnetic strip cards even at the risk of continuous fraud. And also merchants will have to upgrade their Point-Of-Sale System which by itself is an expensive proposition. It’s kind of a situation where the merchants need the updates but do customers have the cards.
Some groups say that by 2018 the shift from magnetic strip credit cards to chip and PIN credit cards can be undertaken. Some companies already offer the latest Chip and PIN credit cards but as the price is expensive it is mainly marketed to the very rich customer base and customers who travel abroad frequently. Because of the small customer base as people can’t afford the Micro chip card the Bank and credit card companies have very little motivation to change the current system. Therefore until the magnetic strip cards are completely removed the hacking would never end.