As more information about the recent rash of data thefts comes to light and additional breaches are discovered, it is becoming ever more apparent that the credit/debit payment system in the United States is broken. New statistics only bolster that reality.
Take for instance a recent Nilson Report, which showed that while the U.S. accounts for only 27% of the credit card transactions worldwide, it is in fact responsible for 47% of card fraud. Or a report from Aite Group and ACI Worldwide, which surveyed more than 5,000 consumers in 17 countries and found that the United States, along with Mexico, is more susceptible to fraud with 42% of respondents saying they have been victims of such fraud.
Why are these data breaches happening at a greater rate in the U.S. than say in Europe?
Simply put, it is because the United States continues to rely on an outdated magstripe payment card whose required signature authorization can be easily plagiarized and used to create a host of fraudulent cards. Most European countries, on the other hand, follow the EMV standard, which uses a microchip technology that offers consumers, merchants and banks much greater security.
But it will take several years for the EMV standard to be put into practice in the United States, as it requires banks to update their card systems. This promises to be a costly investment and banks no have motivation to make that investment because merchants bear the lion’s share of the consumer fraud costs.
In the meantime, American consumers remain sitting ducks as our credit and debit cards remain acutely vulnerable to criminals.
To read more about the Aite Group/ACI Worldwide survey, see the Forbes article here.
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