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Why U.S. Retailers Are Still Vulnerable to Card Fraud

Businesses are behind schedule in upgrading card payment systems
A chip-based EMV smart card
A chip-based EMV smart cardPhotograph by Kristoffer Tripplaar/Sipa via AP Photo

After last year’s massive security breaches at Target and Neiman Marcus, data security pros urged U.S. retailers to upgrade their credit and debit card technology to reduce fraud. Companies have been slow to embrace the more secure payment systems that have been widely used in Europe and Asia for years, mostly because of the expense and a lack of synchronization among retailers, credit card providers, and banks.

Many companies are behind schedule in updating their systems to comply with a chip-based smart card standard known as EMV (for Europay-MasterCard-Visa, the companies that first backed the technology). Credit card networks have set an October 2015 deadline for most U.S. merchants to upgrade their payment systems. EMV is considered more secure because it’s harder to copy account numbers and security codes from chips than from the magnetic strips on most cards used in the U.S. EMV cards create a unique code for each transaction, making them more difficult to hack or counterfeit than striped cards.