Credit cards in 2015 will get safer and simpler to use once Visa and MasterCard switch to cards with chips that require users to type a PIN instead of writing a signature, which should limit breaches of customer data at major retailers like Target.
Visa and MasterCard have partnered for years on a global standard for integrated circuit cards, which could make signing for a credit purchase obsolete. Microprocessors in these chip cards encrypt the data of a transaction shared with sales terminals.
The U.S. is the last major market that has not implemented this standard on card reading machines, unlike European countries. Point-of-sale transactions at stores will shift to chip cards able to make PIN-number purchases by October 2015. Both Visa and MasterCard have been working toward such a transition for some time.
Transactions still can be performed using the old card technology after the transition, but banks will be liable for any payment fraud if they do not issue a card containing a smart chip, and merchants will be liable if their teller machines do not accept the chip cards.
Target also announced in 2012 that it would shift to that card technology by late 2015. Credit and debit card payment data breaches by hackers in recent months have exposed the information of millions, including consumers who shopped at Target.
To prevent those data breaches, the company is jumping ahead of schedule by shifting its store card readers to chip card technology by the first quarter of 2015, Target’s Chief Financial Officer John Mulligan told the Senate Judiciary Committee on Feb. 4. The technology has reduced payment fraud at stores in the U.K., Canada and Australia, Target said in a statement.
“Updating payment card
technology and strengthening protections for American consumers is a shared
responsibility and requires a collective and coordinated response,” Mulligan