For Prepaid Cards, Go The EMV Chip Route When You Can
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The likely culprit of many of today's personal ID data theft may be a decades old piece of technology known simply as the magstripe, or magnetic stripe, that graces the backs of billions of credit, debit and prepaid debit cards carried by Americans in their pocketbooks and wallets everyday. But, there is a more secure alternative on the way, the EMV chip card and is also known as a smart card.
The main issue emerging from the recent theft of personal information from Target and Neiman Marcus is the outdated magnetic stripe technology on credit and debit cards, which is easy to duplicate and vulnerable to fraud. An alternative, the more secure EMV chip card, is widely used in Europe and offers improved identity protection by using an embedded microchip and a personal identification number (PIN) for authentication. EMV technology could significantly enhance security for U.S. consumers, especially those using prepaid debit cards, which currently lack consistent protection. However, EMV cards are not yet widely available in the U.S. due to the high costs associated with upgrading systems and replacing cards. Efforts are underway to implement EMV by 2017, driven by public demand, regulation, and self-interest from card issuers. Implementing EMV for prepaid cards could align their security standards with credit and debit cards and present new opportunities for card providers.