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 recent data breaches at Target and Neiman Marcus highlighted the vulnerability of magnetic stripe (magstripe) technology on credit cards. EMV chip cards, widely used in Europe, offer better security by requiring a PIN for authentication. Smart cards are harder for thieves to duplicate, making them a more secure option. Prepaid debit card users lack the same fraud protection as credit card users, but can benefit from using EMV chip cards. However, the transition to EMV chip technology in the U.S. has been slow due to cost concerns. By 2017, many credit and debit card issuers aim to adopt EMV technology. The widespread adoption of EMV chip cards could improve security standards for prepaid cards as well, creating a new market for card providers.