Following a massive security breach, Target is speeding up the development of high-security cards.
In November 2013, the U.S. retailer was the victim of a cyberattack that lifted roughly 40 million credit and debit card records, in addition to approximately 70 million customer addresses and phone numbers. These records are now believed to be on the black market, and the security breach has been traced back to vulnerabilities in a third-party vendor.
In order to try and salvage something of the situation, Target is ramping up efforts to make services more secure. Writing an opinion piece for publication The Hill on Monday, Target's Chief Financial Officer John Mulligan said the firm is working to make itself more secure in the future, and the "adoption of chip-enabled smartcards .. would dramatically improve the security of all credit and debit cards" in retail.
Target was working on the cards -- which contain small microprocessors that make it more difficult for hackers to steal data -- before the security breach, but Mulligan says development has now been accelerated within the $100 million project.
The U.S. retailer hopes that chip technology will be in stores and integrated within Target's REDcards by early 2015, six months ahead of previous plans. Mulligan writes:
"For consumers, this technology differs in important ways from what is widely used in the United States today. The standard credit and debit cards we use now have a magnetic stripe containing the customer's information. When first introduced, that stripe was an innovation. But in today's world, more is needed.
The latest "smart cards" have tiny microprocessor chips that encrypt the personal data shared with the sales terminals used by merchants. Why is such a change important? Even if a thief manages to steal a smart card number, it's useless without the chip."
These cards are already used in the U.K., but the U.S., where signatures are often still required, has been slow in adoption. The CTO says that in the United Kingdom, financial loss associated with lost or stolen cards has dropped 67 percent since 2004. In Canada, where the cards are already used, losses from card skimming were reduced by 72 percent from 2008 to 2012, according to industry estimates.
In the opinion piece, Mulligan says the industry needs to work together to combat card fraud.
"If we truly want to prevent this from happening again, the business community must move together. No one company or industry can solve this challenge on its own," he wrote. "Strengthening consumer protection requires a coordinated response.This is a shared responsibility."
Target is also working on ways to make mobile transactions more secure in the future.