MasterCard Exec: Time To Phase Out Magnetic Stripe Cards

(RTTNews) - U.S. credit card companies should switch to from magnetic strip cards to the more secure chip technology used in Europe and Asia.

In an op-ed published on CNBC's website, Chris McWilton, president of North American markets at MasterCard, says that recent data breaches confirm that magnetic strip technology is outdated.

"One thing that is surprising is the posturing and finger pointing about who is to blame and who is on the side of angels. At the end of the day, we're all saying the same thing — now is the time to migrate to EMV (Europay, MasterCard and Visa) in the U.S."

"While magnetic-stripe technology was new technology in the 1970s, that is not the case today. Just look at all of the technological advancements since then — the Internet, smartphones, GPS, to name a few."

The credit card industry and major U.S. retailers should be worried that consumers lose faith that their information is secure.

The worst news came from Target (TGT), which admitted malware was installed on its point-of-sale system, compromising the credit and debit card data of up to 110 million customers.

On a smaller scale, apparel retailer Neiman Marcus announced that 1.1 million credit cards were exposed in a hack that went undetected for many months.

"For too many years, different parties have relegated the EMV migration decision to a cost vs. benefits spreadsheet analysis," McWilton says. "However, spreadsheets don't consider the cost of losing the public trust, which is immeasurable."

A number of large U.S. retailers have publicly indicated they are re-terminalizing their stores to accept chip cards by October 2015, and issuing banks are planning a mass rollout of chip cards over the next two-plus years, according to McWilton.

He warns, however, that it will take many years beyond that point to get all checkout terminals and cards enabled with EMV technology.