The Technology to Prevent Data Breaches Could Cost Retailers
Events during the holiday season greatly increased concern among both retailers and consumers over credit card and debit card security.
With news that the Target data breach was far more extensive than originally reported and the announcement on Friday that Neiman Marcus’s network also suffered a breach, many are calling for change in the retail industry.
On Sunday, the National Retail Federation, a retail trade group, called for heightened security standards that might cost the industry. In an interview with the Associated Press, Mallory Duncan, general counsel of the NRF, said the group would like to see retailers upgrade to higher-security payment cards that would store customer information on computer chips and require customers to enter individual pin codes, Reuters reported.
Although retailers have reported breaches for years, the extent of the most recent hacks might signal a turning point in the industry. Updated figures from Target indicate that at least 70 million customers' personal information was stolen, up from the previous estimate of 40 million. The Neiman Marcus breach was nowhere near that magnitude, but Reuters reported that the networks of three other well-known U.S. retailers were also breached during the holiday season.
Retailers have been resistant to switching to the "Chip-and-PIN" cards because they are more expensive than traditional cards and past breaches generally have been manageable. Reuters reported that fraud has so far only cost merchants about 5 cents for every $100 spent by credit or debit cards. The new cards, however, are more popular in Europe and Asia, according to the outlet.
While it is unclear if these cards would have prevented the breach at Target, they would have made it more difficult for the hackers to use the stolen information.
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