Credit Cards with Chip Installed Still Not As Safe As Magnetic Strip Cards
Many banks have sent their customers new credit cards with the chip installed it in an effort to improve security. However, computer researchers have discovered a flaw in the upgrade to these cards in the U.S.
Many people have praised the credit card chips, saying it’s making it impossible to counterfeit them. However, the cards also have the magnetic strip, which is supposed to make the payment machine aware it needs to use the chip.
That’s where the problem lies.
According to computer security researchers from NCR, credit card hackers can rewrite the strip’s code to make it look like it’s a chipless card once more, which lets them continue their counterfeiting practice as it was done previously.
It’s a huge hole in the chip-based system EMV because retailers are not encrypting the transaction when they upgrade their payment machines.
One researcher, Patrick Watson, said it’s a huge misconception that EMV is the savior to the problem. And, the flaw’s discovery gives the retail industry’s claims against the upgrade a boost.
According to the National Retail Federation, American retailers are having to pay $25 billion to upgrade. It would mean that even spending millions of dollars to upgrade to the EMV, retailers are still not protecting customers from a huge credit card hack like the ones seen with Home Depot and Target.
On top of that, the payment terminal creators are manufacturing machines that are not defaulted with the encryption. Plus, vendors who install the machines, have to pay additional money for the basic security.
According to Verifone and Ingenico, the major machine manufacturers, they do have point-to-point encryption on their machines. However, it’s the retailers and partners that must turn it on.
As it stands right now, retailers want to protect the computer network that handles the payment system, but the actual conversation that goes on between the machine and the credit card is still readable by any hacker who gets into the system.