August 10, 2009
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U.S. Credit Card Technology being Eclipsed?, Pt.1
What's the buzz?It's a brave new world. Getting both bigger and slammer at the same time. The US may have been first with the automobile, flight, telephone, credit card, etc. but, it appears that we will not have the final say. We're still using the old English measurement system that even the English haven't used since before anyone can remember. So it is with credit card technology. It's finally gotten to the point where the rest of the developed world is preparing to phase our archaic technology out of use in spite of us. In the near future, US citizens traveling abroad may be greatly restricted to find their credit cards aren't accepted anymore.
In Europe, for instance, the great and powerful EPC (European Payments Council) talking about banning American-type credit cards altogether within the next couple of years. Credit cards relying on magnetic stripes will no longer be allowed. Established in 2002, the EPS is the most powerful governing body over the unified European payment systems. Within two years of formation, this governing body was already phasing out the magnetic stripe technology in favor of the much safer smart-card technology. Since that time, credit card fraud in Europe has been reduced to only about two cents on a dollar of the fraud losses in the US ($900 million in Europe compared to $48 billion in the "US for 2008).
"Chip & Pin" is the smart-card application of choice which requires radio-communication between an embedded chip and a reader coupled with an associated customer-issued PIN which must be punched in. Very difficult to steal and almost impossible to forge. So, what is the US attitude on these impending credit card restrictions? Of course, no one person can answer that question but the powerful Don Rhodes responds with "We'll continue to monitor the situation to see what develops." Mr. Rhodes is the director of risk management policy for the ABA (American Bankers Association).