For most of us, our first encounter with the almighty credit card was on a college campus—usually when we filled out an application in exchange for a free T-shirt or sports bottle. And when the credit card arrived in the mail, we discovered its power: anything you wanted (but otherwise couldn't afford) was obtained in one simple swipe.
Hence, we were set off on a life rife with plastic.
Fast-forward a decade or two and we learned—many of us firsthand—of the downside of credit cards: hacking and its ruinous effects. Malware, which steals personal information, is easy to install in point-of-sale machines—which we saw proof of last fall and winter. With more than 100 million consumers affected by hackers via in-store purchases at major retailers, the importance of credit card security has been driven home even more.
"We are constantly monitoring the security landscape for consumers and businesses, and we are simply shocked by the staggeringly high number of exposed records in 2013," said Mark Milatovich, VP of Information Security and CISO at Webroot.
The financial sector feels the sting of these epic data breaches, and that's inspiring some changes to credit cards as we know them.
So, with October 2015 as America's goal date,* a new credit card system will be a reality for all of us—not just those already using it in Europe.
We're migrating to a "chip-and-PIN" system: two components that help to ensure that data won't be stolen from our 40-year-old, once-innovative magnetic stripe feature. (Actually, our current debit and credit card technology is 10 years behind the rest of the globe.)
Together, these features provide top-tier security, leaving human ill-doing out of the equation. Known abroad as EMV (Europay, MasterCard®, Visa), it's long been used in Europe—as magstripe cards were recognized years ago as too easily corruptible.
Blame it on the bottom line. It costs about $1 each for the cards we currently use, while chip-and-PIN cards run about $3 each, largely because of the chip's cost. (However, once this new system is implemented, the cost of chips should drop.) And despite the volume of fraud (in the billions of dollars), banks still find it cheaper to absorb the cost of hacking rather than switch to chip-and-PIN cards for its customers.
Another barrier to change is that few financial institutions offer chip-and-PIN cards, and few retailers have the point-of-sale technology it requires. So, adoption has had legitimate setbacks.
Yet MasterCard and Visa are pushing for change here—especially as hackers see the United States as its #1 workplace. And, obviously, the U.S. is far behind on what is clearly the global standard. (U.S. travelers in Europe have encountered issues with their "old-fashioned" cards.)
When shopping or banking online, a robust security program like Webroot® SecureAnywhere™ can help keep you safe from viruses, identity theft, and hackers.
If you must use a card at a store, use a credit card rather than a debit card. With credit cards, the onus is on the credit card company to take responsibility for any fraudulent purchase. But with debit cards, rules vary per bank as to whether you'll be reimbursed for any fraud.
"Cybercrime is certainly not going away any time soon. If anything, it's just getting more sophisticated," said Milatovich. But, he says, there are some proactive things you can do to protect yourself.
"Consumers will always need to be vigilant in the fight against identity theft," said Milatovich. "But, being mindful about how we share our personal information is a big step in the right direction."