The 40 million Target shoppers whose credit cards were compromised in a holiday breach might find themselves nodding along to this editorial in the Sacramento Bee: It's high time that the US payments industry did away with the decades-old magnetic stripe on credit cards and adopted microchip-based cards instead, the editors argue. Much of the rest of the world already uses this more secure method, but the US is lagging.
Why? Mainly because the government has let the industry decide on its own how to deal with fraud. "We have a chicken-egg problem here," writes the Bee. "Merchants won’t buy chip readers if banks aren’t issuing chip cards. Banks don’t want to issue chip cards because they collect fees from merchants to cover credit card fraud. A better card would mean less fee income for them." As a result, Congress should step in and make sure that magnetic-stripe cards "go the way of eight-track tape." Click for the full editorial.