The executive vice president of the US Federal
Reserve gave a stark warning that the country is in
danger of being left behind in the fight against fraud due to its
over-reliance on magnetic-stripe cards.
Writing on the Portal and Rails blog of the
Federal Reserve Bank of Atlanta (FRB), Richard Oliver said chip and
PIN’s success has been widely documented across Europe for reducing
fraud and that the US risks becoming the only substantial
economic power dependent on a payments standard that is less secure
than that of the rest of the world.
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Oliver goes on to express concern that if the
US do not migrate to chip and PIN standards the effects could be
devastating.
“Criminals, intent on profiting from card
fraud, will continue to migrate to the United States in growing
numbers,” he said.
“The second issue is that chip-and-pin
technology is a critical element in progressing toward an even more
secure and visionary goal—the deployment of mobile phone-based
payments capabilities using a chip embedded in the phone.”
Oliver also cites studies from payments
research firms such as Aite which have suggested that 10 million US
travellers experienced difficulties with incompatible card
technologies when travelling abroad in the last year.
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By GlobalDataIn order to migrate to the emerging global
standard, the Smartcard Alliance estimates that six million
merchant terminals may need to be replaced or upgraded. With the
bulk of the cost likely to fall to merchants, Oliver comments that
it could be a long time before this becomes a reality.
“If we want to mitigate the possibility of the
United States being a centre of card fraud and enable our consumers
and business folks to travel abroad more easily, it may be time to
charge someone in government with developing a well-thought-out,
participatory, multi-year plan to move this country to the emerging
global payments card standard,” Oliver concludes.
