Disclaimer - The content for this post may overlap with a very interesting article I read on Bloomberg's business. The reason this topic excited me was due to a slight relevance to one of my previous posts about Iceland's Eyjafjallajökull Volcanic eruption. Technically, it does not have any direct connection but the incident has a common thread.
Apparently, there is a new kind of technology called the microchip-embedded credit card. Essentially, this technology replaces the traditional magnetic strip cards used in the US. Interestingly, US is one of the few countries that has not adopted to this technology or the EMV Standard. Let me shed some light on what is technology is all about and what the heck is the relevance to the Volcano.
When the Volcano erupted in Europe, there were several thousand travellers stranded in Europe, lot of them from the US. (just for the record - the relevance with the previous Volcano post ends here), allow me to continue with the rest. When these deserted travelers were trying to get out taking trains, Europeans were able to use the Kiosks while Americans had to stand in line for hours (six + to be precise) to get their tickets, the reason? - Lack of Microchip cards accepted by the Kiosks.
These micro-chip cards are less prone to fraud as opposed to the magnetic stripe regular cards that hold unencrypted data. This data remains static from one transaction to the next, which is an opening for a theft. An EMV card exchanges data with the card reader, producing a digital signature unique to each transaction. "Every one has its own unique key. Without it you can't run the cryptographic algorithms that align with your particular account."
How does lack of this technology matter to the U.S? - Almost 10 million U.S. cardholders experienced credit-card acceptance problems abroad in 2008, costing banks $447 million in lost revenue, according to a study released last year by Boston-based research firm Aite Group.
Why is US slow to transform to such a secure technology, especially when there is a loss in revenue? Is it truly expense to convert the traditional cards to the chip-based cards, Are they in the process of unveiling a better technology (Or) they don't want to eliminate fraud , so they can continue to charge their exorbitant interest rates?
At least, It would be nice for International travelers to have this option from their Credit card issuers, rather than - 'Sorry, but you're Out of Luck.' "
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