After an estimated 40 million customers’ debit and credit card information was exposed to fraudsters over the holiday shopping season, Target has stepped up the implementation of chip-enabled credit card technology in their stores and for their store credit card, the REDcard.
The security breach that lead to the retailer ramping up their payment technology affected people who used any type of payment card, not just the Target card. Making store cards less vulnerable to fraud will not solve Target’s data security issues. However, the retailer said it will also replace all point-of-sale terminals with chip-enabled card readers, so that REDcards as well as other chip cards can be used at all Target locations.
All 1,800 Target stores in the U.S. will be equipped with chip card readers by the first quarter of 2015, six months earlier than their initial projections. The initiative is costing the company an estimated $100 million.
If people use chip-enabled cards, their personal information is much less likely to be accidentally shared. That’s because these cards, also known as EMV cards or smart cards, use a microprocessor chip to encrypt data. These chips are more secure than traditional magnetic stripe cards because they cannot be counterfeited. Even if the card number, expiration date and security code is stolen, the card cannot be used by thieves.
EMV chip cards are already widely used in the rest of world, particularly Europe, Canada and Australia. In all these countries, the use of chip technology has resulted in lowered incidence of credit card fraud.
Target is not the only company dealing with payment security concerns. In early January, Neiman Marcus also revealed that their customers had been vulnerable to an attack on their payment systems over the holidays. And White Lodging Services Corporation, a management company that handle payments for hotel food and beverage outlets including those at Sheraton and Marriott, among others, recently discovered that they experienced a breach of their point-of-sales systems last year that lasted for almost nine months.
Target is offering free credit monitoring services for people affected by the recent security violations. Customers whose cards may have been compromised should watch their account statements closely for unfamiliar charges and alert their card issuers immediately in case of suspicious activity.