Visa, Master Card, Industry To Form Group To Fight Credit Card Security Breaches

(RTTNews) - Visa, Inc. (V) and its smaller peer Mastercard, Inc. (MA) have agreed Friday to form a working group along with consumers, retailers and financial institutions to focus on enhancing payment system security as well as other security related issues.

The group will focus on accelerating the migration of U.S. credit card companies to the more secure EMV chip technology from the current outdated magnetic-strip technology to check credit card security breaches. The chip technology is already in use in Europe and Asia. The magnetic-strip technology was new technology in the 1970s.

"The recent high-profile breaches have served as a catalyst for much needed collaboration between the retail and financial services industry on the issue of payment security," said Ryan McInerney, president, Visa.

The new group will include broad representation from banks of all sizes, credit unions, acquirers, retailers, point-of-sale device manufacturers and industry trade groups. The group will also be responsible for developing an actionable roadmap for securing the payments industry.

Under the EVM chip technology, a unique code is generated for every transaction, which makes it nearly impossible for criminals to use the card for counterfeit fraud.

Shoppers are increasingly using credit cards instead of cash to make purchases. Recently, Target (TGT) admitted that malware was installed on its point-of-sale system that compromised 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.

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

A number of large U.S. retailers have publicly indicated that 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.

However, it will take many years after the technology is introduced to get all checkout terminals and cards enabled with EMV technology.

"As we have long said, no one industry or technology can solve the issue of payment system fraud on its own. These conversations will serve as a useful forum to share ideas, break down barriers and spur the adoption of next generation security solutions for the benefit of all," McInerney added.

V closed Friday's regular trading session at $225.56, up $1.70 or 0.76% on a volume of 2.24 million shares, and MA closed at $77.94, up $0.31 or 0.40% on a volume of 4.13 million shares.