Credit card fraud has been on the rise in the United States over the years, prompting popular credit card companies to make drastic changes to their payment processing methods. Visa has joined with MasterCard and American Express to propose a new way to purchase goods online with credit cards. They call the new method tokens, which they predict will significantly reduce the number of fraud cases in the US.
HOW WILL TOKENS WORK?
Businessweek reports that the tokens “will be the digital equivalent of magnetic stripes on the back of plastic bank cards that contain customer information.” The three credit card companies released a joint statement expressing their desire to create a standard for secure online and mobile payment processing. This new standard will eliminate the need for consumers to save their credit card and bank account numbers in unsafe locations which will make it harder for hackers to commit credit card fraud.
Credit Card Fraud Extra Measures
Despite this recent announcement by the nation’s biggest credit card companies, the concern about credit card fraud is still widespread. The idea of digital tokens is a step forward in securing online payments, however, there are certain anti-fraud methods that American brands are not adopting. The biggest of these is EMV chip technology.
Many European credit cards come equipped with a small, square computer chip visible on the face of the card. This EMV chip, crucial to impressive chip-and-pin security, makes it harder for hackers and thieves to access the card’s valuable information. This method has proved effective all over the world—except for the United States. The US remains among the last developed countries to not embrace chip-and-pin technology such as the EMV chip. In fact, many Americans have experienced trouble when trying to use their traditional magnetic strip credit cards overseas.
The Future of Credit Card Security
While credit card companies around the world are working actively to secure personal and financial information, consumers and merchants alike should remain cautious to prevent credit card fraud. The joint proposition by Visa, MasterCard, and American Express will still take a considerable amount of time to become a reality. Global losses due to credit card fraud totaled $11.3 billion last year, a 15% spike from the year before. Shoppers should continue to make sure their financial information is always safe and that they always purchase from secure sites. Also, merchants should insure that their website adheres to PCI DSS standards to protect from hackers.