This year, there will be an important change in the way Americans use their credit cards. More banks will be issuing cards with small computer chips, a move they say will protect against credit card fraud.
But banks are stopping short of another step that will make credit card usage even safer. And a lot of retailers aren't too happy about it.
Americans use their credit cards a lot, and most of the cards they use operate the same way. The credit card is swiped through a machine, and the machine reads the customer's personal information, which is stored in a magnetic strip on the back.
The problem, says Kevin Yuann of the Website NerdWallet, is that this magnetic strip is really easy for criminals to access.
"The Target breach, for example, or the Home Depot breach, someone skimmed all that card data and then printed out fraudulent cards," Yuann says.
Now U.S. credit card companies are moving to cards encoded with small chips, which have long been used overseas. Yuann says fraud will become a lot harder to pull off.
"That type of fraud won't be able to occur because the chip prevents someone from emulating a card that way," he says.
The U.S. has been slow to accept chip-encoded cards until now because most retailers didn't have the machines that could read them, and they didn't want to pay for them. But later this year, retailers that don't accept cards with chips will be responsible for any fraud that occurs as a result.
So the retail industry invested billions of dollars to buy the new technology. But Mallory Duncan of the National Retail Federation says the new cards won't be as safe as they could be. He blames the big banks.
read more: http://www.npr.org/blogs/alltechconsidered/2015/01/05/375164839/u-s-credit-cards-tackle-fraud-with-embedded-chips-but-no-pins