GRAND RAPIDS, Mich. (WOOD) — A new report by Barclays shows Americans are victims of nearly half of all credit and debit card fraud in the world.
The report revealed Americans are the victims of 47 percent of the world’s credit and debit card fraud, even though Americans only own 24 percent of the world’s cards.
But changes are in the works to make credit and debit cards in America safer by adding EMV chips to them.
“The chips that we’re just starting to see now have been out in the rest of the world for years and they are much more secure than the magnetic strips,” said Jennifer Pope, a marketing professor at Grand Valley State University.
When the United Kingdom started adding the chips to cards in 2003, there was a 70 percent reduction in card fraud there, according to the report.
“The chip, one of the things that it does is it changes the number each time you have a transaction. So even if they were to go in and steal the number, that number is invalid, so it wouldn’t work,” Pope said.
Pope also expects the change will lead to fewer massive hacks like the one that happened to Target in 2013, when 40 million people had their information stolen, and another in 2014 that compromised the credit or debit card information of a staggering 56 million Home Depot customers.
“The chances of systems being hacked the way that they have been like the Target issue and the Home Depot issue will drop significantly because the numbers that they have on file won’t be good numbers anymore,” Pope said.
Pope says nearly everyone will win with the changes.
“In the U.S., we like our credit and we want to continue to use it. If we can make it more secure, everyone is going to be happier — well, except for maybe the thieves, but that’s OK,” she said.
Pope said the U.S. has been slow to move towards the chips for two main reasons: First, we were the country that embraced the credit card boom the most. When other counties saw issues of fraud here in the U.S., they made changes before the cards caught on internationally.
“The magnetic strips are the old technology. And what we’ve seen time again with technology, we’re the first ones to come out with it. We’re the first ones to come out with credit cards, we’re the first ones to come out with a lot of things, and the rest of the world has kind of waited to see how we do and then they go with the newest technology,” Pope said.
Second, banks and credit card companies need new equipment to make the EMV-chipped cards and stores need new technology, and that costs money.
An Oct. 1, 2015 deadline is pushing all parties involved to start using the chip technology. If fraud occurs after that deadline, the liability for covering the cost will have to be covered by whichever party — either the credit card company or the merchant — is least compliant with the chip technology.