Shift to EMV cards could increase online fraud

Recent high-profile break-ins of electronic cash registers at retailers Target and Neiman Marcus has added urgency to Visa and MasterCards plan to dump the swipe-and-sign cards used today by US consumers. In their place will be so-called EMV cards that store security data in an embedded chip.

EMV cards, which have been used for years in Europe, require people to input a PIN to complete a transaction with a retailer. Payments cards in use today in the US have a magnetic stripe for storing data, a decades old technology that hackers can easily mimic when using stolen credit-card numbers to make counterfeit cards.

While in-store fraud with bogus cards is expected to decline, the reverse is predicted for online retailers, which wont experience any significant improvement in security with the switch to EMV cards. Instead of using stolen credit-card numbers at stores, criminals will intensify such activity online.

While websites could require the PIN before completing a transaction, hackers could just as easily steal that data along with the card number.

In time, the credit-card industry could develop ways to leverage the technology in EMV cards to bolster online security. The use of EMV cards is supported by the Payment Card Industry (PCI) Security Standards Council, which sets the rules retailers follow in accepting payment cards. The council has said that use of EMV cards will not change current security standards.