Target Calls to Replace Credit, Debit Cards with Smartcards After Security Breach
February 4, 2014 3:09 PM
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Smartcards have tiny microprocessor chips instead of magnetic strips
Target was the victim of a
major security breach
over the holiday season last year, and as a result, the retail chain is calling for the implementation of smartcards.
John J. Mulligan, chief financial officer and executive vice president for Target, wrote his company's case for smartcards in
this week, saying that the business community in the U.S. needs to embrace the new technology together.
Smartcards, unlike current credit and debit cards used in the U.S., have a tiny microprocessor chip that encrypts the user's personal data shared with the merchant's sales terminals. Traditional credit and debit cards have a magnetic strip instead, which hold's the user's information, but can clearly be compromised. If a smartcard number is stolen, it's useless without the microchip.
To show Target's dedication to the smartcard cause, it's speeding up its goal of bringing its REDcard smartcards to all Target stores by early 2015 -- six months earlier than its previous goal. The chain is making a $100 million investment in the technology to accomplish this goal.
Mulligan also noted that the requirement of a four-digit PIN number with all smartcard transactions could further protect customer information.
[SOURCE: ABC News]
Target said other countries like Canada and the United Kingdom have already deployed smartcards, and that cases of lost or stolen cards have decreased since they've done so. However, the U.S. is slow to adopt the technology because the cards are expensive to produce, and merchants, issuers, banks and the networks haven't found a way to share the costs.
"The reported attacks on Target and Neiman Marcus underline the need to do more," said Mulligan. "At Target, we know we have work to do. For years, we made significant investments in security. We had multiple layers of protection in place. But we still came under attack by sophisticated, global criminals. We will do everything we can to further strengthen Target's systems."
Target attempted to deploy chip-enabled cards around 10 years ago, but since it was the only retailer to do so on that scale, it failed. The cards were too expensive to produce, and since Target was the only one with such a card, customers couldn't use it elsewhere, making it inconvenient and a bit confusing.
Target's breach ran from November 27 through December 15, where customer information like their names, card numbers, expiration dates and CVV verification codes were compromised. Around 40 million customers had their credit cards compromised and 70 million had their customer records stolen.
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RE: Target: "We're incompetent - make technology harder"
2/5/2014 4:05:22 AM
The front-end system is not the problem. The back-end system is not the problem. The problem is using credit card numbers. That's like using people's license plate numbers as the code to open their garage door. You can have the world's most secure garage door opener transmitter, and you can have the world's most secure garage door opener receiver. None of it matters if the code you're transmitting between the two is written in plain sight for anyone to see and duplicate.
Simply copying a number and some trivial pieces of personal information should not allow someone to make purchases in your name. The garage door opener companies ran into this same problem, and figured out a solution (rolling codes) in the 1990s. It's stupid, and criminal that it's been allowed to continue in the credit card industry for this long.
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