Magnetic strips are an outdated credit card tech. In the future, we’ll hopefully all be on chip-based smart credit cards that help prevent fraud. To that end, Square has plans to push out a new version of its mobile credit card reader that can read the EMV smart cards that will be adopted by some of the biggest banks.
EMV smart cards use “chip and PIN” technology that is much more advanced than the “sign and swipe” cards of the past. According to testimony presented before the US Senate last year, the technology not only uses advanced encryption, it also requires that you enter a PIN. After adopting EMV smart card, counterfeiting dropped 78 per cent, and fraud fell 50 per cent. For their part, Chase and Bank of America have said they will go with a “chip and sign” solution which is an improvement if not exactly as secure as it could be.
One of the main obstacles to adoption of EMV smart cards is that the brick-and-mortar credit card infrastructure has lagged to catch up. Which is why it’s a good thing that Square is jumping on-board with the technology with a new reader, which should be available by October 2015. It’s a bite-size step towards a more secure future. [Square]