Our Credit Cards, Cassette Tapes Use Same Technology
And that makes the US the top victim location for hacks like the Target one
By Newser Editors and Wire Services
Posted Dec 23, 2013 12:30 AM CST
In this Jan. 18, 2008 file photo, a customer signs his credit card receipt at a Target store in Tallahassee, Fla.   (AP Photo/Phil Coale, File)

(Newser) – "The US is the top victim location for card counterfeit attacks like this," says the CEO of the Electronic Transactions Association of the recent Target hack. That's in part because US credit and debit cards rely on an easy-to-copy magnetic strip on the back of the card, which stores account information using the same technology as cassette tapes. In most countries outside the US, people carry cards that use digital chips to hold account information. The chip generates a unique code every time it's used. That makes the cards more difficult for criminals to replicate. So difficult that they generally don't bother.

So why aren't we doing something? For one, it can be expensive. And while global credit and debit card fraud hit a record $11.27 billion last year, those costs accounted for just 5.2 cents of every $100 in transactions, according to a Nilson Report. Another problem: retailers, banks, and credit card companies each want someone else to foot most of the bill. Card companies want stores to pay to better protect their internal systems. Stores want card companies to issue more sophisticated cards. Banks want to preserve the profits they get from older processing systems. Credit card companies in the US have a plan to replace magnetic strips with digital chips by the fall of 2015. But retailers also want each transaction to require a PIN number instead of a signature. Banks make more on transactions that require signatures because there are only a few of the older networks that process them, and therefore less price competition.

Copyright 2016 Newser, LLC. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed. AP contributed to this report.

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Showing 3 of 12 comments
Tology
Dec 24, 2013 9:56 AM CST
They just figured that out?
ddhartma
Dec 23, 2013 8:38 AM CST
BTW: Those "safer" cards with chips embedded instead of the mag stripe can be hacked as well (many times even easier than the mag stripe cards). http://www.makeuseof.com/tag/rfid-hacked-stay-safe/
WLeoB
Dec 23, 2013 8:24 AM CST
Computers-101: 1. ALL digital electronic "data" is a stream of 1's and 0's. 2.A group of four 1's and 0's is a "nibble", two nibbles, or 8 of the 1's and 0's is a Byte. Take a few bytes and you have a word. "Words" can have 8-bits, 16-bits, etc. The processor in the PC you're reading this on probably uses 32-bit or 64-bit words.. 3. Back in the day (1970s,1980s), this old engineer did some programing in "Machine Language" to run machinery in manufacturing processes. Machine Language is expressed in hexadecimal form instead of binary. That language uses 16 characters: 0-9 plus A through F. Zero plus 15 characters is equal to 16 as a zero is as important as a 1, eh? 4. The geeks reading this know the advantages of going from 32-bit word processors to 64-bit processors. The advantage of 64 bits is quicker addressing of the larger memory that is becoming available. For example, 32-bit addresses can cover 4 gigabytes and 64 bits can cover billions of gigabytes. That's plenty for years to come regardless of the application. 5. More for the geeks that kneel at the alter of digital computers. Without analog and hybrid computers we never would have made it to the moon. You see, an analog computer can instantaneously use PID (Proportional, Integral & Derivative) control loops to calculate complex equations that a digital computer would take more time to do as it has to use many calculations to arrive at the output signal that an analog controller generates instantly and continuously. It's an analog world and no matter how hard they try, it cannot be imitated with digital 1's and 0's though digital cameras are getting very close. That's it for today, class! WLeoB, Canton, MI Peace.