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Why Experts Consider New U.S. Multi-Billion Credit Card System Upgrade Is Already Vulnerable To Cyber Scams

More and more concern is raised over the question of security of the newly implemented system EMV

credit card hacking

   As the looming deadline for the new chip-enabled credit card change in the U.S. is coming to a close this year, more and more concern is raised naturally, over the question of security of the newly implemented system that goes by the name EMV (EuroPay MasterCard Visa). This system upgrade is already widespread except in a few countries such as the United States.

The EMV smart card system dates back to 1993, but it was accepted by the United States in 2014 mostly because of the increase in identity theft. The first company that has been allowed to use the technology was MasterCard. The cost of the switching to a ­­„new“ smart chip technology is excessive, we are talking of billions of dollars. Which is probably the reason why this technology was not introduced earlier. A decades-old technology of magnet stripes used for credit cards enabled hackers to steal over 40 million credit and debit cards used at Target in 2013. This made America wake up and turn towards the chip-based cards following year, which are considered more secure. Other countries moved beyond the magnet strip technology years ago.

In Europe, when banks implemented the change, government rules forced consumers to start using credit cards like debit cards – requiring that PIN codes be entered each time a card is used. The change adds two important levels of security or two-factor security. To complete a transaction, buyers need to have in their hands a chip card, which is incredibly challenging to counterfeit. And they must know something — a PIN — that’s not on the card. It’s more expensive for criminals to forge these cards compared to the magnet ones. Chip-and-PIN technology raises the costs for the bad guys, it’s not that they can’t break the system — but it makes it more expensive for them to fabricate these cards.
The U.S. is poised to implement only half this system. Chip cards must be accepted by merchants by the fall deadline, but not PINs. The so-called “chip & signature” system is a half-measure, according to experts. Without the PIN code, which is unique, Americans will keep using their signature at checkout and anyone can sign for you. A criminal who physically steals a chip & signature credit card will have no trouble using it to commit a scam in a store by faking the consumers’ signature.
Cyber criminals can still break into a store’s computer system, scrape the memory of payment terminals that contain customer signature and steal credit card data. The massive hacks like those at Target will keep happening.

Banks officials say this year’s switch is a big step forward in scam prevention. Retailers think this is just another ploy by banks to slam them with higher costs. After Oct. 1, 2015, if someone uses a chip card in the U.S. at a store that hasn’t adopted the new terminals for reading chip cards, the store may be responsible for any fraud that happens not the bank. Another issue is that U.S. is so far behind that new payment forms, such as mobile payments, may have overtaken old-fashioned plastic cards by the time the EMV adoption is complete. Mobile payment systems like Google Wallet could be widely used in five to ten years.

However, the value of the upgraded security will be less in the U.S. than it was in Europe where banks enjoyed at least a few years of reduced fraud before criminals caught up. In different words, U.S. criminals already have quite a head start on their EMV workarounds being already familiar how the cyber scam works.

About nona (27 Articles)
Founder of The Hack Times, information gathering and cyber security specialist , always one step ahead. Open for communication.

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