Target Speeding Up Move To Chip-Enabled Credit Cards

(RTTNews) - Target Corp. (TGT) Chief Financial Officer John Mulligan will appear before Congress on Thursday to discuss the holiday-season data breach that may have effected 110 million customers.

In an op-ed piece written for The Hill, Mulligan says he Target is speeding up a program that will update brick-and-mortar stores with technology designed to stop credit card fraud.

"One step American businesses could now take that would dramatically improve the security of all credit and debit cards: adoption of chip-enabled smartcards," Mulligan wrote ahead of his testimony before the Senate Judiciary Committee.

"The technology is already widely used throughout the world. For many reasons, the United States has been slow to embrace the technology at home. We need to change."

Target is spending $100 million to put the chip-enabled technology in place, with the goal of fully implementing the new cards by early 2015, six months ahead of schedule.

U.S. retailers are concerned that customers lose will lose faith that companies can protect their information. Target's Black Friday breach, where hackers installed malware at point of purchase registers, was the largest in a series of attacks that have compromised customer data.

Mulligan cited figures from Europe and Canada to show that adopting chip-enabled cards will save retailers from steep financial losses and give peace of mind to their customers.

In the United Kingdom, where smart card technology is widely used, financial losses associated with lost or stolen cards are at their lowest levels since 1999 and have fallen by 67 percent since 2004.

In Canada, where Target and others have adopted smart cards, losses from card skimming were reduced by 72 percent from 2008 to 2012.

"The latest 'smart cards' have tiny microprocessor chips that encrypt the personal data shared with the sales terminals used by merchants. Why is such a change important? Even if a thief manages to steal a smart card number, it's useless without the chip," Mulligan wrote.

Mulligan will join representatives from the Consumers Union, Federal Trade Commission, U.S. Secret Service and U.S. Department of Justice at the "Privacy in the Digital Age: Preventing Data Breaches and Combating Cybercrime."

Senate Judiciary Committee Chairman Patrick Leahy, D-Vt. earlier this month called for stricter data privacy standards in the wake of the Target breach.

"Developing a comprehensive national strategy to protect data privacy and cybersecurity remains one of the most challenging and important issues facing our nation," Leahy said. "This important issue will also be the focus of a hearing before the Judiciary Committee this year."

U.S. credit card companies should switch from magnetic strip cards to the more secure chip technology used in Europe and Asia, according to an executive from one of the top credit card companies.

An executive from one of the major credit card issuers says his company is on board with the changes.

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.," McWilton wrote.