Executive Order requires federal government credit and debit cards to incorporate “chip-and-PIN” technology
WASHINGTON, D.C.–(ENEWSPF)–October 20, 2014. U.S. Senator Dick Durbin (D-IL) today applauded President Obama’s decision to issue an Executive Order that is intended to better secure financial transactions and safeguard sensitive consumer data. The Order requires government payment cards – such as the prepaid debit cards that Treasury uses to distribute Social Security benefits – to incorporate secure “chip-and-PIN” technology to store card information instead of relying on the unencrypted magnetic stripe on the back of the card.
“Fraud-prone U.S. payment card technology has long been a key vulnerability that has put consumers’ sensitive financial information at risk. The Administration’s commitment to “chip-and-PIN” will help bring the U.S. in line with nearly all other developed countries that have already adopted this safer, more secure technology,” said Durbin. “This is a smart approach that will benefit American businesses and consumers, reduce payment fraud, and help move the payment card market in a more secure direction.”
Durbin has long criticized banks for discouraging their U.S. customers from using PINs to authenticate payment card transactions. For years, banks had steered American consumers toward signature debit transactions which had significantly higher fraud rates than PIN debit transactions but which also paid higher “swipe” fees for the banks. Additionally, Durbin has long advocated for enhancing payment card security technology in the United States.
While most other industrialized countries transitioned long ago to chip-based cards with authentication measures like PINs that provide greater fraud protection, payment card providers in the United States still use insecure, 1970s-era magnetic stripe technology. As a result, according to The Nilson Report, in 2012 the U.S. accounted for nearly half of global payment card fraud losses despite representing less than one-quarter of the world’s payment card volume. In 2010, Durbin authored debit card swipe fee reform legislation that aimed to incentivize greater card security in the United States by conditioning a portion of banks’ swipe fees on the banks’ adoption of effective fraud prevention steps.
Today’s Executive Order also requires government retail payment terminals (e.g., at passport offices, national parks, and elsewhere) to be able to accept “chip-and-PIN” card payments.
Source: durbin.senate.gov
