Experts Calling For Smarter Credit Cards After Massive Data Breach

After more than 40 million credit and debit card numbers were stolen during a massive data breach at Target retail stores, many credit experts are calling for U.S. credit card companies to adapt to the use of new credit cards that will help combat fraud.

The theft occurred between Nov. 27 and Dec. 15 at Target locations throughout the country. USA Today reported many customers had their card numbers, names and CVV codes stolen during this enormous breach.

Trying a new type of card
Experts say this level of identity theft is a signal to U.S. merchants and credit providers that new cards should come with security microchips. The practice, which is fairly common in Europe and Canada, would store consumer information inside the chip and make it difficult for thieves to access the information.

Although this security measure has not been widely embraced by credit card companies, some are trying it out. Joram Borenstein, vice president of Nice Actimize said this measure will do wonders in preventing fraud over the long run.

"The U.S. is slowly issuing these cards to users," Borenstein told the Los Angeles Times. "It's harder to commit fraud against these cards. You have to steal the chip information, and that's a lot more difficult."

There are a number of reasons why the U.S. has been slow to offer this option. The Times reported a few of these reasons include a bad discourse between businesses and financial institutions and the cost of converting more than 1 billion credit cards from magnetic strip technology to EMV.

Successful in other countries
The practice of installing security chips into credit cards and reconfiguring payment terminals is something that has already been started in Europe. A 2012 report conducted by Javelin Strategy & Research found 94 percent of sales terminals in Europe already have this measure in place, compared to the 10 percent of U.S. terminals that do.

Even though many credit providers and merchants have not fully adopted this policy, there have been small talks to get this system underway. The Times reported that several major credit card issuers have discussed rolling out this upgrade by Oct. 2015. MasterCard Spokesman Jim Issokson said this measure will not happen overnight, but is being discussed.

"The road map and larger migration has provided issuers and merchants with the flexibility to manage their business and technology decisions," Issokson said. "The decision on if, how and when EMV will be implemented has been and will continue to be made independently by each issuer and merchant."

Big projections
​Randy Vanderhoof, director of the EMV Migration Forum, told The Times his company measures almost 15 million smart credit cards used throughout the country, which amounts to less than 1 percent of the country's total. Vanderhoof predicts that by 2014, there will be 50 million to 70 million smart credit cards, which will force many retailers to change their pay terminals in order to adapt to the new payment option. Other U.S. banks, including Citigroup and Wells Fargo have already started issuing the EMV cards.

Rush Taggart, chief security officer for CardConnect, said in an interview that thefts, like those at Target, will continue to occur and predicted that the microchip security measure is inevitable.

"There's no doubt in my mind it will happen over the next two years." Taggart told Reuters. "The fraud risk is too high, I think we all wish it had happened over the last four years."

Reuters reported there are 1.6 billion EMV cards currently in use throughout the world.