Even after a year in France, I’ve been determined to maintain my US bank account. While my $/USD paycheck fluctuates with €/EURO conversion rates, my bank offers free checking, zero ATM fees, and ridiculously good customer service. My only complaint is that the US banking and credit/debit system is extremely outdated. In the rest of the world, cards are equipped with a chip and PIN system instead of (or in addition to) magnetic strips. Many French stores are no longer able to “swipe” cards, as the chip only uses a slot system, so I’ve encountered plenty of bizarre looks from checkout clerks with my carte américaine.
Elise Hu of NPR posted a great article yesterday describing the benefits of switching to a chip-enabled system, linking the issue to the recent Target data breach.
Industry leaders know magnetic stripes are outdated and easily exploitable. The rest of the world moved on to a more secure, harder-to-hack payment system based on chip-enabled cards — chip and PIN. Chip-enabled cards are more secure because the data on the chip are hidden behind encryption. So even if criminals intercept what’s on it, they can’t reuse it.
This means simply entering your PIN to complete a purchase, similar to most debit cards, instead of signing. As I’m sure that everyone who has scrawled their name across a receipt or touch screen can attest, a PIN is a far more reliable and secure way to ensure that your card doesn’t fall into the wrong hands.
Hu’s article describes one major drawback to making the switch on a national level. Our current card readers are not equipped to read chip-encrypted cards. Replacing every card reader at every location of every business in the country will come at an enormous expense to the businesses. At the same time, the risk of another large-scale data breach is now a potential expense that cannot be ignored.