Although likely just a funny coincidence after having his personal credit card recently declined at a restaurant in New York City, on Friday October 17, 2014 President Obama signed an order called the “BuySecure” initiative. This initiative calls for the expedited adoption by government entities to accept EMV Chip and PIN credit cards.
EMV, which stands for EuroPay, MasterCard, Visa, is a technology that uses an embedded smart chip rather than the 40 year-old magnetic strip technology to store the credit card’s information. Magnetic strips store and send credit card data statically, which makes them vulnerable in security breaches. When credit card data is stolen, thieves can then replicate a credit card and make purchases until the discovery is made.
EMV cards, also known as “Chip & PIN” are designed to add security to customer-facing retail transactions. The smart chip uniquely encrypts the credit card data for each transaction. In addition to the smart chip, customers are also required to enter a personal identification number (PIN), further adding to the level of security.
There has been push by the credit card associations for migration to EMV for all entities involved in the credit card transaction process to be compliant by October 2015. The card associations call this the “EMV liability shift”, in which merchants that are not compliant by that time may be held liable in the event of a security breach.
However, Obama’s BuySecure initiative hopes to speed up the adoption following major breaches that have happened in recent months.
Mega chains like Home Depot, Target & Neiman Marcus been hacked, resulting in the theft of credit card data and personal information of millions of their customers. When these security breaches happen, not only does it cost banks and card associations millions in fraudulent charges, customers are more at risk of identity theft. With EMV technology, it’s next to impossible to steal credit card data.
According to President Obama, Home Depot, Target and Walgreens and Walmart plan on installing EMV-compatible credit & debit card terminals as early as January 2015, well before the EMV liability shift.
In his speech at the Consumer Financial Protection Bureau on October 17th 2014, President Obama stated that government credit cards would soon incorporate the EMV chip-and-pin technology. Also part of the BuySecure initiative is the implementation of EMV credit card terminals by federal government agencies, enabling them to accept and read embedded chip cards.
By taking the 1st step in becoming EMV compliant with its BuySecure initiative, the government hopes to encourage many other retail establishments to follow their lead.
According to a White House press release, “The goal is not just to ensure the security of doing retail business with the government, but also, through this increased demand, to help drive the market towards swifter adoption of stronger security standards. Institutions like the United States Post Office have already made this transition across tens of thousands of retail facilities across the country.”
The BuySecure initiative may be just be nudge retailers in the U.S. need to understand the serious nature of credit card fraud, and take their own initiative to becoming EMV compliant.
Regardless of whether U.S. retailers follow the lead of the government’s BuySecure initiative and become early adopters, sooner than later they will be required make the transition to EMV credit card compliance.
If you have questions about EMV, give us a call. We’d be happy to help.