Credit cards equipped with smart chip technology are slowing edging towards reality here in the States. On Friday, The White House announced it would start requiring government-issued credit and debit cards be equipped with chips. That means folks who receive federal benefits on debit cards will get new plastic with high-tech chips embedding in them. Also, government facilities that allow purchases with plastic will be equipped with terminals that accept chip cards.
“The new BuySecure Initiative will provide consumers with more tools to secure their financial future by assisting victims of identity theft, improving the Government’s payment security as a customer and a provider, and accelerating the transition to stronger security technologies and the development of next-generation payment security tools,” said the White House in a statement. The BuySecure initiative was announced at an event Friday at the Consumer Financial Protection Bureau.
Ed Mierzwinski, Consumer Program Director with advocacy group U.S. PIRG, cheered the move.
“U.S. PIRG commends the President for using the government’s buying power to accelerate improvements in credit and debit security that are critically needed by American consumers and businesses. Recent breaches at major merchants and the nation’s largest bank have demonstrated the need for better protections for card information,” he said.
Chip card adoption still faces an enormous chicken-and-egg problem. The new cards won’t mean much until retailers pay for and install new point-of-sale terminals that accept them. To wit, your reporter here has had a new chip card for a month, issued by my bank in response to a major credit card hack, but I haven’t found a place to use it yet.
There are signs that is changing, however. Visa on Friday announced a major awareness campaign; consumers will get mail calling attention to new chip card in consumer mailings, and see signs at retailers that have spiffy new card-ready terminals.
In other words, pretty soon you aren’t going to avoid encountering credit card chip technology. That’s a good thing.
“The adoption of chip technology has the potential to virtually eliminate counterfeit fraud when widely adopted, and will help consumers feel more confident about using their payment cards,” said Ellen Richey, chief enterprise risk officer, Visa Inc.
Ms. Richey, who talked with me recently about the upgrades, is right. One kind of fraud will virtually disappear with the new cards — a bad guy taking a stolen account number, recording it onto a counterfeit card, and using that card in a store. That’s a good start. But that won’t happen until there’s no place to use an old mag-stripe card, and that’s going to take a while. And criminals will shift to other kinds of fraud, like online fraud, when that happens.
Still, it’s a step in the right direction. It should mean far fewer annoying card re-issues. Can’t happen fast enough.
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