New York -- The National Retail Federation on late Tuesday sent a letter to Senate Majority Leader Harry Reid and House Speaker John Boehner that called for replacing the magnetic-strip credit and debit cards that are widely used throughout the United States with chip-based cards that store data in an embedded computer micro-chip and require the use of a PIN rather than a signature. The chip-based cards are widely used in Europe, Asia and Africa.
The NRF said that the magnetic-strip cards use easy-to-hack 1960s technology in contract to the advanced PIN and chip cards, which better protect consumer data from theft, hacking and skimming.
“For years, banks have continued to issue fraud-prone magnetic stripe cards to U.S. customers, putting sensitive financial information at risk while simultaneously touting the security benefits of next-generation PIN and chip card technology for customers in Europe and dozens of other markets,” NRF president and CEO Matthew Shay said in the letter.
It is estimated that only about 10% of cards in the United States have the new chip and pin technology. At about 50 cents each, the magnetic-strip cards are much less costly than the chip-and-pin cards, which costs about $2 per card.
The NRF said the retail industry is eager to work with banks and card companies to fight cyber attacks and reduce fraud.
“These efforts include installation of sophisticated new PIN-enabled point-of-sale-systems and readiness to adopt cards with more secure microchip technology, but the fact remains that retailers cannot do this alone,” Shay said.
Both MasterCard and Visa have called for the use of chip cards. But they have not been definite whether the card should be used with a pin or a signature, which could be more prone to fraud than using a pin.