Magnetic Stripes in line to be Replaced by Embedded Chips in Credit Cards

Jan 24, 2014
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The spotlight is burning hot and bright on credit card security following the theft of the information of 40 million consumer from the retail giant Target. Credit card security spans from the databases where information is stored to the magnetic stripes located on the cards themselves. The magnetic stripes have become a source of scrutiny and a source of improvement in the constant tug-of-war against criminals and fraud.

Target Security Breach Due to Magnetic Stripes

If  the Target debacle has taught us anything about credit and debit card security it’s how vulnerable we all can be to identity theft and fraudulent transactions.

Target has played things close to the vest regarding the security breach, even to the point of facing class-action lawsuits regarding their delay in reporting the breach, but inside sources report that the breach was due to the theft of data located on the magnetic stripes on the back of credit and debit cards used at their retail locations.

The magnetic stripes on these cards are identified as being vulnerable to theft as criminals can lift sensitive information from this source of data.

Chip-and-Pin

One solution that is already active in some European countries are credit cards that use a microchip embedded in the credit or debit card. A customer would only need to press the card and the chip to a terminal and then enter a PIN number or sign.

The benefit of these Chip-and-Pin cards is that they are more expensive to  forge, thus reducing the odds of a criminal counterfeiting your credit or debit card using sensitive information.

This new credit card system is employed in some countries, but isn’t due in the United States from Visa or MasterCard for another two years.

Comparing Europe and States

The United States may appear to be lagging behind with regards to this new security measure. In a security industry that has seen little change over the decades, new security measures would seem to be an obvious choice.

Yet fraud is fraud, and criminals, even with an elevated cost attached to fraud, will still seek an easy way to rip off credit card information. Countries abroad using the Chip-and-Pin have discovered fake terminals created to extract sensitive information.

Even Chip-and-Pin cards still often frequent magnetic stripes for use when traveling, leaving them still perfectly vulnerable to having information extracted. However, the difference for Americans comes in consumer protection.

Federal Protection in the US

The great advantage for credit and debit users in the States is the consumer protections by the Federal Reserve’s regulations. Consumers are protected to a degree from credit card fraudulent transactions by the ability to call the bank to fix the issue at a maximum fee of around $50.

In the UK consumers are required to write a letter in the process of filing a claim, making the entire process far more difficult. This means in the UK consumers must watch out for their credit and debit card security while in the States the bank is charged with finding anti-fraud solutions.

It is always important to reconcile your credit accounts and track your credit history. Identifying fraud quickly and reporting it is the most effective way to combat criminals and protect yourself from loss. As the technology associated with credit cards and security improves, criminals will find new ways to exploit sensitive information. Always be your own check and your own fail-safe against fraudulent transactions.

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Having a merchant account allows an account holder to take advantage of merchant cash advances. When a merchant is approved for an advance, the business agrees to receive a lump sum of cash in exchange for an agreed-upon percentage of future credit card sales.

Pricing varies depending on the merchant’s industry, past credit card processing history, the type of business seeking the account, average ticket sales, and average transaction volumes.

Yes, EMB works with merchants who are building their credit, as well as those who have poor credit. EMB also approves merchants that have no credit card processing history and businesses that have lost their merchant accounts due to high chargebacks.

Several factors influence a merchant’s risk level. Though only one factor likely will not get a merchant classified as high risk, a combination of these may: business size, location, and industry, credit score, credit card processing history, a industry’s reputation for excessive chargebacks, a prior history of high chargeback ratios, and whether a merchant exclusively sells online.

Virtual terminals are stationed on a merchant’s website, making it easy for customers to make a payment or purchase online. Merchants or a payment processor can easily set up virtual terminals, so online businesses can accept credit and debit card and e-check transactions.

A merchant account is a business account with an acquiring bank. Without this business account, which actually works more like a line of credit, a merchant cannot accept and process credit and debit card transactions. Businesses need a merchant account to accept major credit cards via a static point-of-sale terminal, mobile card reader, or through a virtual payment gateway.

After filling out EMB’s simple online application and submitting any necessary, requested documents, many merchants get approved within 24 and 48 hours.

EMB specializes in working with high-risk merchants. EMB works with many merchants, including but not limited to businesses in these industries: gambling and gaming, adult entertainment, nutraceuticals, vaping and e-cigarettes, electronics, tech support, travel, high-end furniture, weight loss programs, calling cards, e-books and software, and telecommunications.

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