Next Generation of Payment Cards

You likely have heard about the new shift in the credit card industry from magnetic strip to EMV chip cards. These cards have a small chip in them that facilitates communication to the payment card company in place of the magnetic strip technology that has been the industry standard for 25+ years. Historically, the motivating factor in large data breaches has been static data associated with payment cards. Once a thief breaks whatever security measure are in place and clones the magnetic strip of unsuspecting card holders that clone can be used over and over again which turn the fruits of the hacker’s labor into cash.

Credit: http://www.tomsguide.com/us/mobile-wallet-guide,news-20666.html

That is about to change once the swipe is replaced with the dip. The major security benefit of EMV is that every time you make a purchase, a new unique transaction ID is used to facilitate the transaction with the retailer. That transaction ID is unique to that sale and will never be used again, making the data retained by the retailer useless to a hacker. This payment model is the same deployed by mobile payment services like Android Pay, Apple Pay, and Samsung Pay. The difference between these three lies in how the information is transferred to the Point of Sale machine but the payment model of unique payment ID numbers is shared among them.

Chip Cards, By The Numbers

Credit: http://www.creditcards.com/credit-card-news/emv-faq-chip-cards-answers-1264.php

 

There will continue to be security risks, and EMV is not a cure-all pill. It does nothing to improve the security of online payments and not all retailers will have EMV POS machines at launch, leaving those retailers not only vulnerable, but heavy targets for hackers. Expect breaches aimed at smaller retail operations that do not have the means to upgrade their equipment at launch because EMV enabled cards can still be swiped if a POS machine is not able to process EMV payments. Europe has been using EMV for several years and credit card fraud has dropped by as much 80%, so it is clearly a step in the right direction.

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