Will We See Chip-Based Cards Earlier than Expected?

The recent massive data breaches at retailers over the holiday season that compromised at least 70 million customers’ credit card information have some experts predicting an increased call to  get chip-based cards to become mainstream in the U.S.

Credit cards that use smart chips instead of magnetic strips, called EMV cards, are harder for hackers to duplicate and are common across Europe, according to Rob Sadowski, director, technology solutions for cyber security firm RSA. However, they have yet to be implemented across the U.S. as many merchants do not have the proper technology to accept the cards in stores.

Visa (NYSAE:V) has reportedly warned that some stores’ banks may have to bear the financial costs  associated with a data breach starting in October 2015, a move that is likely to make retailers more keen on implementing the proper terminals to use EMV cards.

“There will obviously be more interest in these cards, but just because we want something to happen doesn’t mean it will happen overnight,” Sadowski says. “There are still fairly significant roadblocks out there.”

Target’s CEO Gregg Steinhafel said in an interview last week that the industry is “ready to move” toward adopting these chip-based cards.

More widespread consumer attention may place added pressure on the credit card industry to change to the chip card system, Sadowski says. “The one thing we always see from breaches is the amount of consumer interest and outrage. It’s very visible in retailers’ minds.”

Target suffered a breach impacting more than 70 million consumers that used credit and debit cards in stores between Nov. 27 and Dec. 15.  Soon after, Neiman Marcus announced it suffered a breach from July through December. The incident is still being investigated but the luxury retailer says it does not believe customers’ Social Security numbers or birthdates had been compromised.

While Sadowski says adopting chip-based credit-card technology will add an extra layer of protection, it won’t eliminate hacking altogether. Sophisticated criminals could still get their hands on personal  info, these cards would just make it harder to duplicate counterfeit cards after the breach.

“It’s tempting to say these chip cards would be a silver bullet,” he says. “You will still be able to capture the [card] information, but it’s just harder to turn it into outright fraud.”