The problems with the magnetic stripe
By Michael Hammond, Record staff
A reader sent me an email a few weeks ago telling me his new microchip-enabled credit card had been breached in the United States, which had him wondering why the people behind the Kitchener-Waterloo chip card trial have insisted the new technology has yet to be compromised by criminals.
The answer is quite simple, but I'll get to that in a second.
Regular Record readers will know that Canada's national banks and credit card companies have chosen the two cities to test the new chip cards, which are being touted as being much more secure than the old fashioned cards with just the magnetic stripe. The chips encrypt data in a way that makes it harder to skim information.
The only difference customers will notice is that their cards will not be swiped at point of sale terminals. They will be inserted into a slot and remain there for the duration of the purchase. Credit cards will now need PINs. Other than that, the process takes the same amount of time. To learn more, go to the chip migration website.
So, what of this reader who said his card was breached? Those behind the chip card told me his card was likely breached when its magnetic stripe was swiped through an older terminal not equipped with the microchip technology. It could also have been compromised through an online transaction. The lesson, I was told, was that these chip cards still are vulnerable, when the magnetic stripe is used. Consumers need to be careful when using a card in an older terminal that only accommodates the stripe. This means protecting your PIN and using common sense.
This isn't to suggest the reader who sent me the letter didn't use common sense. It might be he assumed the chip card offered superior protection in chip-enabled terminals and older terminals. This is not the case. Older point of sale terminals will continue to be in use for years since the migration to chip cards will take years. That means consumers will still need to use their magnetic stripes and be aware of the risks involved.
Net Gain is a jointly produced blog. It is produced by the Waterloo Region Record's business reporters Chuck Howitt, Rose Simone, Matt Walcoff and Michael Hammond. Net Gain gives you added insight into the business headlines and the fortunes of Waterloo Region's dynamic economy.
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