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Why Chip and PIN Credit Cards Aren’t Going to Save the World

by on November 24, 2011

Chip and PIN Credit Cards Aren’t Going to Save the World

The American credit card community is buzzing with excitement over the upcoming debut of chip and PIN credit and debit cards. Also known as EMV credit cards, these pieces of plastic are an upgrade from the magnetic “stripe and sign” cards that we currently use in two distinct ways.

The most obvious difference is that chip and PIN cards store a cardholder’s account information on an embedded radio chip rather than a magnetic stripe. These chips are much harder to hack than magnetic stripes, and they allow for “contactless” transactions that use wireless reading machines to process the card from a distance. On top of that, they use a debit-style PIN code to verify transactions. Unlike the traditional method of signing for purchases, a PIN code can’t be forged if the card is stolen.

Unfortunately, even though these EMV cards are certainly a welcome addition to the market, they’re not going to bring about the sort of revolution that many Americans are hoping for. Yes, you’ll start to see television commercials from Chase and Wells Fargo suggesting otherwise, but the truth is the truth.

Here are a few reasons why chip and PIN credit cards won’t save the world:

  • They’re old news. EMV credit cards are sure to be touted as revolutionary, but Europeans have been using them since 1994. In fact, one of the main reasons these cards are finally being issued in the U.S. is to appease American travelers who are tired of being unable to use their outdated credit cards overseas.
  • EMV CardsThey’re not that secure. While the radio chips that EMV cards use might have been completely secure 17 years ago, a lot has changed since then. Europe has learned the hard way that these cards aren’t perfect, and the introduction of phone-mounted wireless card readers makes them even more dangerous, since thieves can now steal the information on these cards just by walking close to you on the street. Even the PIN system isn’t totally safe anymore – thieves can mount hidden thermal imaging cameras on ATMs and gas pumps that use your lingering heat signature to decode your combination.
  • There’s a better way. As you might suspect given that chip and PIN technology is now 17 years old, there are even newer and better types of credit cards making their way onto the market. For Americans, moving to these cards is like upgrading from Windows 98 to Windows Vista rather than Windows 7. Stores in Brooklyn have already started to accept digital credit card “apps” for Droids and iPhones, and multi-account cards known as “credit card 2.0s” have also started to get attention from the tech community.

In many ways, EMV credit cards are a good thing for American consumers. In some ways, they’re a great thing. American travelers will finally have credit cards that work outside of the country, and while our hometown thieves are figuring out how to hack the chips, the rest of us will be able to enjoy a period of security. But it won’t take very long for criminals to figure out how to exploit these American EMV cards. They’ve done it before, after all, in Europe. Therefore, we should welcome chip and PIN credit cards as a band-aid rather than a suture and continue to push for even safer credit-card technology in the near future.

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