But they cautioned the transition will be slow and costly, and it will not be a cure-all to problems such as the massive security breaches that occurred at Target and
Representatives of the credit card, banking and retail industries, joined by consumer advocates, testified at a joint hearing of two Assembly Committees examining the safety of consumer financial data.
Visa has announced that effective
Even with that incentive, analysts expect only about 60 percent of merchants to have made the transition by then. Total cost to merchants, banks and credit card companies to make the transition in
The microchips allow the cards to use a dynamic system, creating unique verification codes for each transaction. The magnetic-stripe cards used in
The technology makes it virtually impossible for a thief who has acquired a consumer's personal information to create a counterfeit card, she said.
The microchip cards were developed overseas because other countries lacked the telecommunications infrastructure that enables instantaneous verification of magnetic-stripe cards.
Members of the Assembly Judiciary and Banking and Finance committees, retailers and consumer advocates applauded the coming change, but many argued that other steps are necessary to reduce risks to consumers.
Wearing a T-shirt emblazoned with a bull's eye and the word "privacy," Consumer Watchdog President
"There is no value to our privacy under the law," Court said, asserting that companies will begin to take the issue seriously only if there are potential financial consequences.
He noted that
"Consumers need a hammer," Court told lawmakers. "Create a private right of action."
Judiciary Committee Chairman
He said retailers have suffered 10 times the losses of banks and 20 times the losses of consumers as a result of credit-card fraud. Dombrowski argued for stiffer criminal penalties against perpetrators. "We need to recognize this is a determined battle against criminals," he said.
Although he did not specifically mention the legislation, Dombrowski used the opportunity to argue against a bill by Sen.
"It makes no sense for
Dombrowski noted that many merchants believe the most secure solution to information breaches and credit-card fraud is to aggressively moved toward transactions completed using a smartphone.
Because smartphones have powerful computing capabilities, they can generate bar codes that allow for payment from a mobile wallet system -- a process that shields the consumer's underlying payment information from the retailer's payment system.
"Mobile-device payment solutions may be the answer," Dombrowski testified.
(c)2014 Ventura County Star (Camarillo, Calif.)
Visit Ventura County Star (Camarillo, Calif.) at www.vcstar.com
Distributed by MCT Information Services