A recent report says that chip cards might not be as iron-clad as we expected.
Those security-driven chips cards might not be so secure after all.
Credit and debit cards embedded with EMV chip technology offer greater protection from hacking and counterfeiting than their old strip counterparts, but new evidence suggests there are concerns with the technology—no doubt an issue for small business owners.
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Here’s how the chip works: Instead of storing a credit card’s information on a magnetic strip, data is placed on to a small microchip that’s built into the card. When these cards are placed into a card reader, they enable an owner to have the ability to punch in a four-digit PIN number instead of scribbling out an illegible signature. This feature was designed to make chip cards safer for consumers and small businesses, but that might not be the case.
Technology researchers at the NCR Corporation demonstrated a way that hackers can rewrite the code on an EMV card’s magnetic strip to behave like a chip-less card, making it much easier to pilfer information, according to AOL Finance.
Entrepreneurs have already been uneasy about the EMV cards for some time now because of the cost it takes to upgrade card readers. So far, the transition has cost U.S. retailers $25 billion, CNNMoney reported.
“This latest research shows that retailers could spend millions of dollars upgrading to EMV and still not protect their customers from a massive credit card theft like the Target and Home Depot hacks two years ago,” CNNMoney reported.
The new cards pose another problem for small businesses. As of Oct. 1, 2015—the deadline for businesses to upgrade their card readers—those that do not have the new machines will be held liable for any credit card fraud that befalls their customers, KXAN News reported.
To prevent this, small business owners would need to dole out extra cash to encrypt their card readers, or risk liability for any fraudulent purchases, AOL Finance reported.
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