Chip technology still vulnerable, group says Retailers seek protective PIN for cards
Our credit cards are secured with computer chips, but the world’s largest retail trade group said consumers are no safer, while businesses are forced to spend up to $35 billion.
Most banks and credit unions issue credit cards that require a signature, rather than a PIN, a move that the National Retail Federation said means businesses are spending a fortune on terminals and software that will process “partially protective cards” that are still vulnerable to data breaches.
In many cases, the new equipment “pro- vides no significant benefits either to the business or to the business’ regular customers. It is merely an additional expense small businesses are being told to bear,” David French, NRF senior vice president for government relations, said in a statement submitted to the House of Representatives’ small business committee.
The committee held a hearing on what the switch to chip-enabled cards means for small businesses more than a week after a liability shift took place, making merchants responsible for fraudulent transactions made with a chip card that they were unable to process.
Chip-enabled cards are more secure than those with just a magnetic stripe because they generate a unique code for each transaction, making them harder to counterfeit. The need for such technology has been underscored in the past couple of years in the wake of several high-profile data breaches at companies such as Target.