To strengthen the U.S. payment system in the wake of massive holiday breaches that occurred at Target and Neiman Marcus (and subsequent finger-pointing), Visa and MasterCard announced a plan to work with large and small banks, credit unions, acquirers, retailers, point-of-sale device manufacturers, and industry trade groups.
The record-setting data breaches resulted in multiple lawsuits (click here to read our previous newsletter) and arguments about what various entities needed to do to better protect consumers. Now, members of the payments system have agreed to form a working group as a “public recognition of the importance of all parties to work together” to accelerate payment security, according to a statement about the group’s formation.
The first item on the agenda: the use of digital chips embedded in debit and credit cards to store account information as a replacement for the current magnetic strips. The EMV chip technology (which is commonly used in Asia and Europe) makes the theft of credit and debit card numbers more challenging.
MasterCard and Visa had established an October 2015 deadline for retailers to incorporate the technology necessary to recognize such cards.
Other items up for consideration include a move from signatures to the use of PIN numbers to complete a card transaction, the use of a one-time number for online sales as “an additional layer of security” and stronger encryption methods.
Why It Matters: In addition to pushing the use of EMV technology, the cross-industry payment security working group also proposed long-term goals, including the development of “an actionable roadmap for securing the future across all segments of the payment industry.”