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Reports US

US stock market daily report (March 07, 2014, Friday)

March 10, 2014, Monday, 05:29 GMT | 01:29 EST | 09:59 IST | 12:29 SGT
Contributed by Millennium Traders

A new cross-industry group, including anyone who touches credit cards including banks, credit unions, industry trade groups and retailers, has been formed by the world's two largest payment networks MasterCard Incorporated (MA-NYSE) and Visa Inc. (V-NYSE), per reports on Friday. The group are prioritizing the adoption of the safer Europay [EMV] chip technology in the United States in order to improve payment system security following several, high-profile data security breaches. In order for U.S. retailers to adopt the new payment technology for EMV, MasterCard and Visa set a deadline of October 2015.

EMV cards are much harder to counterfeit and provide more protection for sensitive data through encryption. To make purchases, cardholders using EMV will be required to enter a personal identification number or PIN as an added level of security.

Ryan McInerney, President of Visa said in the statement, "The recent high-profile breaches have served as a catalyst for much needed collaboration between the retail and financial services industry on the issue of payment security. We remain insistent that U.S. retailers’ customers be given the same protections as consumers in more than 80 countries who have both a chip and a PIN securing their credit and debit cards. There is no single solution to the complex issue of criminal hacking and we know PIN and Chip is just a bridge on the long road to a safer payment system, but it is an important step in the right direction. While we certainly agree that speed is of the essence, we don’t believe that is an obstacle to introducing PIN and Chip cards since the technology is well established and the cards are widely used around the globe."

Experts estimate the upgrade to cost nearly $10 billion. Banks and retailers remain concerned over who should bear the cost. Current credit card technology was created in the 1980's and desperately in need of an overhaul due to increased number of security breaches on consumers.

Byron Pollitt, Visa CFO said at an investment conference this week that PIN technology could slow down security improvements due to the investment required and existing infrastructure. Pollitt plugged a "chip and choice" model and said the payment industry should also consider encryption and tokens. Pollitt said, "Our view is it is chip and choice, and that PIN could well be a red herring here because two-thirds of the retailers in the United States do not have a PIN pad with their POS terminal, two-thirds. And so if PIN were to be included as a fix at the same time, in our view, it would dramatically slow the rollout of EMV, which is chip, and chip is what gets you to 70 percent of the fraud. The lost and stolen is addressed by PIN."

Europay International was the name of the entity created by the merger of Eurocard International and Eurocheque International which stores information on computer chips rather than on traditional magnetic strips. EMV is already widely used in Europe and Asia.

Mallory Duncan, General Counsel for the National Retail Federation said in a statement, "We remain insistent that U.S. retailers' customers be given the same protections as consumers in more than 80 countries who have both a chip and a PIN securing their credit and debit cards."

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