A senior official at the US Federal Reserve has expressed alarm that the country is being left isolated by its reliance on mag-stripe cards while the rest of the world moves to more secure EMV-based Chip and PIN payment technology.
Writing on the Portals and Rail blog
of the Federal Reserve Bank of Atlanta, executive vice president Richard Oliver says that the US risks becoming the only substantial economic power dependent on a payments standard that is less secure than that of the rest of the world.
"That means that criminals, intent on profiting from card fraud, will continue to migrate to the United States in growing numbers," says Oliver, who is also responsible for managing the Fed's cheque and ACH businesses nationwide.
The US reluctance to move away from mag-stripe technology is also becoming a major inconvenience for US citizens travelling abroad. Oliver points to research from analyst house Aite that suggests that as many as 10 million US travellers experienced difficulties with incompatible card technologies when on foreign soil during the past year.
Equally, EMV-standard chips are at the centre of emerging moves towards more secure and user-friendly mobile payment systems.
Says Oliver: "Chips embedded in the phone, coupled with applications loaded on the phone from card-issuing banks, will create the effect of a "mobile wallet" that promises to be more convenient and, yes, more secure than what we use today."
But with merchants unlikely to volunteer to shoulder the cost of upgrading the six million or so terminal devices in use in the US, it may be necessary to escalate the issue to the public policy level, says Oliver.
"If we want to mitigate the possibility of the United States being a centre of card fraud and enable our consumers and business folks to travel abroad more easily, it may be time to charge someone in government with developing a well-thought-out, participatory, multi-year plan to move this country to the emerging global payments card standard," he concludes.