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Banks push for switch to fraud preventing smart cards
Swiping your credit card could soon become a thing of the past.
Some credit card companies want to replace the magnetic stripe with an encrypted computer chip.
The United States is the only developed country that hasn't tossed out credit and debit cards and replaced them with smart cards.
"I think we'll all welcome the retirement of magstripe when it comes," said Bohdan Myroniw, Director of Business Development at AJB Software.
You can spot a smart card by the fingernail-sized gold contacts embedded on one side. Through the contacts, a chip inside the card can transmit information to a terminal when slid into a slot.
Smart cards work like a safe: they hide information and it can only be unlocked with the right key.
Because of this, the cards can't be replicated.
"I mean I've had my credit card stolen before so if it limits credit card fraud and I don't get my information stolen, why not? I think it's a good idea," said Josh Emilson.
Card fraud costs US merchants, banks, and consumers billions of dollars each year.
The smart cards won't stop every kind of fraud, but it could help prevent what's happening with the Target breach.
"Bad guys can't copy the chips, so it's hard to clone cards. And chip and pin credit cards prevent that kind of fraud," said Bob Sullivan. independent consumer advocate.
Chip-based cards are costly, it costs between $500 and $1,000 to install the machine that reads the chips.
Still, Mastercard, Visa, and American Express are pushing for a transition to smart cards by October 2015.
"If it'll curb fraud then it's a good thing. I haven't investigated it fully but it sounds like it'll be a good thing. We need to do something," said Angela Fortune.
And if after October 2015 a retailer has not switched, they'll be held liable for any fraudulent charges.