Hack-Resistant Credit Cards Bring More Safety—at a Price

After the data breach that compromised some 40 million credit cards—not to mention the personal information of 70 million customers—Target’s chief financial officer, John Mulligan, apologized again and again and promised that the retailer will improve security, in part by accelerating a shift to more secure payment cards.

What exactly does that mean? During testimony this month on Capitol Hill, Mulligan referred to “chip technology;” others who testified threw around the term “chip-and-pin” cards. They’re talking about credit cards and debit cards with an embedded microchip on which the card information—card holder, card number, expiration—is stored. In a chip-and-pin system, instead of swiping and signing to make payments, point-of-sale machines read the chips, and cardholders enter PIN codes to verify their identities.