Target Corp., the second largest general retailer in the United States, has announced that it will accelerate chip-and-PIN payment card technology in its stores. The retailer plans to move its Redcard credit and debit card portfolio to cards that operate with MasterCard Inc.’s chip-and-pin technology, though many cards will not necessarily have the MasterCard brand.
The company will install chip-compatible point-of-sale systems and software in its nearly 1,800 stores in the United States by September. This will allow the locations to accept the new chip-enabled Red cards in early 2015, six months ahead of schedule.
Target had tested a chip card system ten years ago but abandoned it. In the wake of the data breach which compromised 40 million payment card numbers and non-card data on 70 million customers, it has again revisited the notion of chip technology. Target has even pledged $100 million to its chip card effort.
Target is just one major company that is propelling the change to chip-and-pin technology forward. Visa Inc. announced in 2011 that it planned to convert and all of the major general-purpose payment card networks have been putting in motion the conversion of their U.S. card bases from the fraud-vulnerable magnetic stripe to the Europay-MasterCard-Visa (EMV) chip standard. EMV cards provide better defenses against point-of-sale compromise and counterfeit fraud, though online card fraud hasn’t been reduced much.
The United States is the only major country that has yet to convert to EMV technology. While EMV has its advantages there is still more to be done to protect against counterfeit and fraudulent activities such as end-to-end encryption and tokenization, and a solution for online transactions. EMV pin and card technology though are still ahead of what the United States currently uses which is why many big merchants and banks are constantly advocating for the system.
With the target stepping up, it is likely that other merchants will slowly follow suit. Whether retailers choose MasterCard or Visa isn’t as important as the push to make this technology available. Though Target’s decision to use EMV pin and card technology (MasterCard), in lieu of chip and signature authentication (Visa) might allude to an ongoing conversation regarding how to best apply the technology.
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