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Nation/World

May 24, 2014

Visa, MasterCard renew push for microchip cards

NEW YORK — Visa and MasterCard are renewing a push to speed the adoption of microchips into U.S. credit and debit cards in the wake of recent high-profile data breaches, including this week’s revelation that hackers stole consumer data from eBay’s computer systems.

Card processing companies argue that a move away from the black magnetic strips on the backs of credit cards would eliminate a substantial amount of U.S. credit card fraud. They say it’s time to offer U.S. consumers the greater protections microchips provide by joining Canada, Mexico and most of Western Europe in using cards with the more advanced technology.

Chips aren’t perfect, says Carolyn Balfany, MasterCard’s group head for U.S. product delivery, but the extra barrier they present is one of the reasons criminals often choose to target U.S.-issued cards, whose magnetic strips are easy to replicate.

“Typically, fraudsters are going to go to the path of least resistance,” Balfany says.

The chip technology hasn’t been adopted in the U.S. because of costs and disputes over how the network would operate. Retailers have long balked at paying for new cash registers and back office systems to handle the new cards. There have been clashes between retailers, card issuers and processors over which processing networks will get access to the new system and whether to stick with a signature-based system or move to one that requires a personal identification number instead. These technical decisions impact how much retailers and customers have to pay — and how much credit card issuers make — each time a card is used.

The disputes have now largely been resolved. And the epic breach of Target’s computer systems in December, which involved the theft of 40 million debit and credit card numbers, along with smaller breaches at companies such as Neiman Marcus and Michaels, helped garner support for chip-based cards among retailers who were previously put off by the costs.

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