With the scheduled changeover to chip and PIN debit and credit cards in 2015, POS fraud may decrease dramatically. That’s the good news. The bad news for online credit card processing companies is that thieves and hackers will simply move their operations to the Internet to avoid the new POS encryption requirements.
As we all know, the recent mass hijacking of consumer data from Target and Neiman Marcus stores brought belated focus on the need for the Europay Master/Visa cards to be implemented in the U.S. as quickly as possible. Up until November, giant retailers like Target had been dragging their feet over the huge expense necessary to switch out all their point of sale terminals. Most of them were waiting until their normal capital depreciation forced them to replace their terminal infrastructure.
Now the rash of lawsuits, investigations, and fines has pushed these reluctant behemoths into action, albeit with a grumbling kind of slouching toward compliance attitude. If most of these giants had their way they wouldn’t even install encryption software until their terminals wore out, much less new hardware. But their hand has been forced and now consumers will be seeing PIN and chip cards sooner rather than later.
Which leads us to the hackers who created this mess in the first place. They are definitely capable technicians and putting “bump” proof terminals in place in the stores will only cause them to look for greener pastures – and those pastures lie in the Cloud.
The problem is that online retailers won’t experience any significant improvement in security with the switch to EMV cards. While websites could require the PIN before completing a transaction, hackers could just as easily steal that data along with the card number. There is a huge difference between a hardware-guarded POS in a local store, and a software “protected” online network. In the Cloud, there are so many ways to get onto the network (stolen cards, vendor gateways, etc.) that it won’t be long before intrepid hackers find the soft underbelly of this huge and rapidly growing area of commerce.
In time, the credit-card industry could develop ways to morph the technology in EMV cards into a workable online security paradigm. But until then, with the rapidly growing use of smartphones and mobile devices to facilitate online transactions, you can be sure that real security for consumers will be a hope and not a reality for some time to come.
2015 May Reduce In-Store Fraud, But Hackers Most Likely Will Move Online. – ©2014 Money Movers, Inc.