The National Association of Convenience Stores (NACS) reported this week:
"The Star Tribune reports that several years before Target incurred its massive loss of credit card data last month, it was well aware that a theft risk existed and it had unsuccessfully pursued “innovative solutions” to counter such threats... In the early 2000s, Target had installed “smart card” technology at all of its U.S. stores, an effort to thwart the very theft that the retailer suffered. The company said it abandoned the three-year pilot because few other retailers adopted the technology, which put Target at a disadvantage because the emerging technology slowed checkout times..."
The breach has jeopardized Target's REDcard program. The Star Tribune reported:
"In fiscal 2012, REDcard purchases made up 13.6 percent of Target’s sales, compared to 5.9 percent two years before... Target’s REDcard program, which offers 5 percent off each purchase and free Internet shipping, is a crucial component to the retailer’s strategy of getting consumers to frequently shop at Target stores and buy more stuff. It also collects enormous amounts of consumer data..."
So, consumers are to believe that a retailer followed the herd and rejected a newer, safer technology only because it wanted to avoid long checkout lines. Are you willing to trade security for shorter checkout lines? Target shoppers: were you even asked about this?
It seems to me that Target executives failed to recognize security as a benefit for consumers. Consumers already choose between regular and express checkout lanes in supermarkets nationwide. It's not a stretch to offer checkout lanes dedicated to shoppers with smart REDcards; at least market test or survey the concept. My point is: give shoppers the choice. Given the large number of data breaches during the past decade, I'll bet the many shoppers wil pick security. Breach victims experiencing the hassles of fraud, changed PINs, changed bank accounts, and related damage would gladly move to a smart REDcard.
"It is safe for you to use your REDcard debit and credit card. If you would like additional peace of mind, you can always change your PIN number on your Target Debit Card and set up alerts for your REDcard through Manage My REDcard..."
Europe has already moved to smart credit/debit cards with EMV chips. Why does the United States lag in this area? Why would banks and retailers in the United States continue to use credit/debit cards with antiquated magnetic-strip technology? Read this blog post to learn a few reasons why.