Discussions about credit and debit card security were heating up even before retailers experienced data breaches last winter. Needless to say, after the breaches and a wealth of media reports touting the fact that Europe, Canada, and most of the rest of the world already have more secure payment systems than the one used in the United States, interest in replacing the current system there has increased.
Eighty countries around the world are currently implementing Europay, MasterCard and Visa, or EMV™ technology. In some places, EMV compliance is further along than it is in others. For instance, about 95 percent of point-of-sale credit card machines (aka terminals) in Europe are EMV compliant; 79 percent of terminals in Canada, Latin America, and the Caribbean; 77 percent of terminals in Africa and the Middle East; and 51 percent of terminals in the Asia Pacific region.
Why is a card with a chip and pin better than a card with a magnetic stripe and a signature? One of the primary reasons, according to Forbes, is improved security:
“Most credit cards in the United States operate with a simple magnetic stripe that can be captured and copied relatively easily. Much of the rest of the world uses a small chip on the credit card to validate with a transaction. The chip employs cryptography and a range of other security features and measures that create a multi-layered defence against card fraud. When combined with a Personal Identification Number or PIN code (the sort used on ATM cards), it substantially raises security. Even with just a signature it makes a marked improvement over a simple magnetic stripe.”
The United States, until recently, was the last major market holdout. However, according to current estimates, 60 percent of merchants will have EMV compliant devices by 2015.
A new method of payment has been introduced in the UK. Contactless is a function on certain debit, credit and prepaid cards that allows you to make a quick and easy payment for goods or services for an amount that is £20 or less without entering a PIN. All you have to do is place your contactless card over the card reader to make the payment.
There is talk about using our mobile phones to make a payment instead of using a card. At the moment, this is still at an early stage of development, but in the not so distant future, you may be able to pay with your mobile phone, much like you would do for a contactless transaction. In the US, there have been changes in technology, so that people are able to make transactions and move money through their own mobiles/smart phone or tablet already. The UK is looking to follow in their footsteps.