Smart Chip Credit Cards

Smart chip cards

In recent months, there have been a number of high profile security breaches involving the theft of credit card information from well-known companies. While the volume of information acquired by thieves is staggering, the effect of the breaches has prompted credit card issuers and merchants to consider options for increasing data security. One potential technology that could be used to protect consumer data is the use of smart chip credit card technology.

Credit cards embedded with smart chips are not new, and are currently in wide spread use around the world. Unlike their magnetic strip counterparts, smart chip credit cards cannot be read by swiping. Cards must be inserted into a Point-of-Sale (POS) terminal capable of reading card information, preventing card data from being acquired by a skimmer placed around the point of card insertion. Account data stored on the chip is also encrypted and may incorporate the use of a Personal Identification Number, similar to existing debit cards, to add extra layers of protection. While the technology is designed to make it more difficult for thieves to acquire personal account information, adoption of smart cards is not without drawbacks.

Smart chip cards are more costly to produce, increasing the price credit card issuers have to pay to issue a new one to customers. To read smart chip data, merchants will have to purchase new POS terminals, a cost many companies, particularly small businesses, might not be able to easily absorb. Instead of shouldering these costs alone, merchants and card issuers might choose to charge customers a fee for access to and use of the new cards to offset costs related to their adoption.

Dozens of countries around the world have already adopted smart chip credit card technology, and given the continuing escalation of data theft incidents, it might not be long before such technology is in wide-spread use in the United States.

If the wide-spread use of smart cards comes to America and USPS kiosks are upgraded to receive the new technology, should the company add a surcharge for its use?

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3 Comments

  1. Grannybunny

     /  March 25, 2014

    No, I do not believe companies should add a surcharge for smart card use. It is a cost of doing business and should be factored into the price of the goods/services just like any other cost. Businesses accept credit and debit cards — even though they increase their costs — because, ultimately, they increase overall sales. Target, Neiman-Marcus and other retailers lost business because of security breaches associated with magnetic strip cards. Were they to go to the smart cards, they would probably regain most — if not all — of those lost customers and revenue.

  2. Jonn

     /  March 25, 2014

    I wouldn’t pay for this either. It’s the company’s responsibility to secure our data if they want to accept credit cards. If they don’t want that level of responsibility, then they can choose to accept only cash. It’s the same with other types of sensitive information at doctors offices, accounting firms, and other companies that stores the data of customers. If they keep it, they’re obligated to protect it.

  3. Bradley

     /  March 26, 2014

    Why is it that whenever new technology is introduced here in the United States, that the cost for the usage is always placed on the backs of the tax payers. The businesses should be glad to absorb the cost. In the long run; everyone wins if it prevents theft.

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