Credit Card Chip Security: Issues and European Adoption

Europe uses a different type of credit card than the U.S. Marketed as secure and theft-proof, the card has a computer chip that requires a personal identification number (PIN) for use. When using it at a point of sale, the PIN number is required instead of a signature. This dual system required new types of banking machines and registers, costing more than one and a half billion U.S. dollars according to The Daily Mail in March 2009. The new cards may not be secure, since theft has increased forty-three percent since the system started in February 2006.

Theft Issues

Credit card theft reached a record high in 2008. A 14 percent increase in theft has occurred since 2007 and 43 percent since the computer-chip card was released. The security problem seems to be linked to cloning the cards. Prior to the new system, PINs were used at approximately 50,000 bank machines. With point of sale transactions now, cards are used at more than 900,000 banking and point of sale machines. Thieves have many more opportunities to steal information from the cards magnetic strip and obtain the PIN number.

Simultaneously, police are refusing more and more to investigate credit card theft and leaving it to the banks to investigate. According to The Daily Mail, the United Kingdom banks are beginning to refuse refunds to victims. Cambridge University Computer Lab Professor Ross Anderson said that the promotion of the safe computer-chipped credit card was simply marketing "spin." He also states that the system is broken.

Traveling

North Americans traveling to Europe are encountering problems with the new computer chip credit card system, according to the Miami Herald. The computer chips are not currently used in the United States, so when a person travels in Europe, her credit card is declined. Typically, the issue can be dealt with by speaking to a manager and showing proper identification. However, places like railway stations do not have attendants to speak with when the credit card is rejected. The person must find an official to address the problem.

Technology Problems

A Y2K-type incident happened in Germany with the computer chip credit cards. Approximately twenty million debit cards and three and a half million credit cards did not work in January 2010. Gemalto is the Amsterdam-based company that released the cards. The company has updated banking machines to accept the cards, however, the cost to fix the issue cost approximately $427 million. Although the issue has been addressed, similar problems may occur.