The company is being sued by banks that have lost hundreds of millions of dollars
Following the recent data breach in which a total of 40 million payment cards have been compromised, US retailer Target is determined to do something about the magnetic stripe payment cards that are so easy to abuse. The company wants to replace them with chip-enabled smartcards, which are much more secure.In an article posted on The Hill, John J. Mulligan, the chief financial officer and executive vice president for Target, explains that the company attempted to roll out such technology around 10 years ago.
However, the program was discontinued after three years because other organizations refused to implement the new cards, making it confusing for customers.
“Since the breach, we are accelerating our own $100 million investment to put chip-enabled technology in place. Our goal: implement this technology in our stores and on our proprietary REDcards by early 2015, more than six months ahead of our previous plan,” Mulligan said.
Mulligan gives the United Kingdom as a positive example. In the UK, where PIN and chip cards have been used, financial losses associated with lost or stolen payment cards have dropped by 67% since 2004. That’s because skimming attacks don’t work against such cards.
On Tuesday, the Target CFO will testify before Congress regarding the recent data breaches suffered by retailers.
Since the data breach, a number of lawsuits have been filed against Target. However, ABA Journal reports that it’s not just consumers who are going after the retailer.
Financial institutions have also filed suits. They argue that they’ve lost hundreds of millions of dollars because Target failed to implement proper security measures to protect customer information.
The retail and the banking industries have been blaming each other for the recent data breaches right from the start. Retailers say banks should have implemented PIN and chip cards a long time ago, while financial institutions say companies should have deployed better security systems.