Credit and Debit Card Ratings

Target Speeds Move to EMV Cards

Target has vowed to do what it can to speed the US’s transition to more secure payment card technology.

In testimony before the Senate Judiciary Committee, Target Chief Financial Officer, John Mulligan, said that one of the company’s responses to the massive data breach that impacted tens of millions of its customers in late 2013 would be to equip all 1,800 of its U.S. stores with card readers able to process EMV card transactions by the beginning of 2015. The new timeline announced by Mulligan is over six months earlier than Target’s previously stated goal for implementing smart card technology in its stores. EMV cards, also known as smart cards, are considered far more difficult for hackers to compromise than the magnetic stripe technology currently used by most credit and debit cards.

Additionally, Mulligan told lawmakers that Target’s own REDcards will also transition entirely to EMV technology. “Updating payment card technology and strengthening protections for American consumers is a shared responsibility and requires a collective and coordinated response,” Mulligan said. “On behalf of Target, I am committing that we will be an active part of that solution.”

Target is undoubtedly motivated to speed up its move to EMV technology by the avalanche of negative attention and subsequent hit to its profits caused by the data theft. Still, most security experts believe it’s the right move. EMV technology is a far tougher nut for data thieves to crack than magnetic strip technology, which has long been the security norm in the U.S. Because EMV cards contain a microchip that must be authenticated with a personal identification number – hence the technology’s other name, chip and PIN – they are far less vulnerable to identity fraudsters than magnetic swipes.

In countries around Europe and throughout the globe, the fact that EMV cards are standard has reduced the amount of identity theft significantly. The replacement of magnetic strip technology with EMVs certainly won’t end data theft altogether. As Mulligan noted in his Senate testimony, Target cannot force the whole country to embrace EMVs. It will require broad support from other retailers and card issuers for all U.S. consumers to get the benefit of the elevated protection offered by EMV cards.

Tag: prepaid card

  • Target Speeds Move to EMV Cards

    Target Speeds Move to EMV Cards

    Target has vowed to do what it can to speed the US’s transition to more secure payment card technology.

    In testimony before the Senate Judiciary Committee, Target Chief Financial Officer, John Mulligan, said that one of the company’s responses to the massive data breach that impacted tens of millions of its customers in late 2013 would be to equip all 1,800 of its U.S. stores with card readers able to process EMV card transactions by the beginning of 2015. The new timeline announced by Mulligan is over six months earlier than Target’s previously stated goal for implementing smart card technology in its stores. EMV cards, also known as smart cards, are considered far more difficult for hackers to compromise than the magnetic stripe technology currently used by most credit and debit cards.

    Additionally, Mulligan told lawmakers that Target’s own REDcards will also transition entirely to EMV technology. “Updating payment card technology and strengthening protections for American consumers is a shared responsibility and requires a collective and coordinated response,” Mulligan said. “On behalf of Target, I am committing that we will be an active part of that solution.”

    Target is undoubtedly motivated to speed up its move to EMV technology by the avalanche of negative attention and subsequent hit to its profits caused by the data theft. Still, most security experts believe it’s the right move. EMV technology is a far tougher nut for data thieves to crack than magnetic strip technology, which has long been the security norm in the U.S. Because EMV cards contain a microchip that must be authenticated with a personal identification number – hence the technology’s other name, chip and PIN – they are far less vulnerable to identity fraudsters than magnetic swipes.

    In countries around Europe and throughout the globe, the fact that EMV cards are standard has reduced the amount of identity theft significantly. The replacement of magnetic strip technology with EMVs certainly won’t end data theft altogether. As Mulligan noted in his Senate testimony, Target cannot force the whole country to embrace EMVs. It will require broad support from other retailers and card issuers for all U.S. consumers to get the benefit of the elevated protection offered by EMV cards.

  • Prepaid Card Popularity Continues To Rise

    Prepaid Card Popularity Continues To Rise

    The meteoric rise in prepaid card popularity is continuing. According to a recent statement by Fitch Ratings, a Chicago-based rating agency, the use of prepaid cards is also likely to continue well into the future, fueled by changing consumer behaviors and banking industry dynamics that have made debit cards less appealing.

    Fitch says the combined factors of the increasing popularity of gift cards and a desire by consumers to get away from traditional forms of payment – like credit cards and debit cards – in the aftermath of the recession helps explain the booming prepaid card popularity. According to data from the Federal Reserve, between 2009 and 2012 prepaid card transactions grew by 33.5 percent annually. The total number of prepaid transactions reached 3.1 billion in 2012, which was 1.8 billion more than just three years earlier.

    Other factors beyond recession-shocked consumers are at work here, says Fitch. One element driving consumer acceptance of prepaid cards is an overall improvement in the quality of the cards available. Long geared only to people who could not get bank accounts or credit cards, prepaid cards earned a deserved reputation as fee-laden, consumer-unfriendly choices of last resort. But increasing interest on the part of mainstream U.S. consumers has led to large financial companies entering the market offering low-fee, easy-to-use cards.

    As an example, Fitch cites the October 2012 launch of Bluebird, a card launched by American Express and Walmart. Recently, American Express reported that $2 billion has been loaded to Bluebird accounts since the card was first offered. In 2013, fully 39 percent of the money deposited to Bluebird accounts came via direct deposit.

    Another factor in the rise of prepaid cards, says Fitch, are regulations that have made debit cards less appealing. In particular, the ratings agency notes that the Durbin Amendment, restricted the amount of money banks could charge for debit card transactions. With a large chunk of revenue off the table, banks have made changes to checking accounts, including introducing new fees and canceling rewards programs. The result, says Fitch, has been a continuing consumer shift to low-fee prepaid cards.

     

     

     

     

     

     

     

     

     

     

     

     

Credit and Debit Card Ratings