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Retailers and Credit Card Issuers join forces in cyber security

For years merchants in the U.S. large and small have been in a battle with card issuers over the weak security provided by the magnetic strip on cards, known as the Byzantine system. That is changing due to an announcement late Thursday of a partnership of a dozen leading industry associations that they have formed a new cybersecurity partnership to improve payment-card security and thwart data thieves, reports the Star Tribune Minneapolis.

‘Consumers expect both that the payments system will protect their sensitive information, and that they will receive the convenience they've come to expect while using their credit or debit cards,’ Frank Keating, head of the American Bankers Association, said in a joint news release.

The Financial Services Roundtable, a group that encompasses major financial institutions, including card networks, and the Retail Industry Leaders Association are taking the lead.

The Consumer Bankers Association, which is part of the new partnership, previously estimated that it costs an average of $10 to replace a card, for a total of $172 million, a number that doesn't include the cost of any fraudulent activity that may have occurred.

The merchants in the U.S. finally have available to them the EMV terminal to accept the coming new EMV, Euro-Mastercard-Visa, an embedded microprocessor chip smart credit/debit card which is read by an EMV compatible card terminal. It can then send the encrypted data onto the computer processing center for payment to merchants and customer information to the credit card institution for billing to its customers.

Europay, MasterCard and Visa initiated development of the EMV Specifications in 1994. It will be mandatory by Oct. 15 2015 for all merchants. Although everyone has until 2015 to upgrade, quite a few financial institutions are already rolling out EMV cards. Given the prevalence of EMV throughout the world, banks have realized that smart cards are a travel benefit that can be touted, just like travel insurance and no foreign transaction fees. Many of the major issuers have them, as well as some credit unions (including Pentagon Federal, State Department Federal and Andrews Federal).

All merchants who accept credit/debit cards will be required to the process with the EMV terminals by Oct. 15, 2015 or be responsible for fraudulent transactions if they have not installed contact chip terminals. Liability will shift from the card issuer to the acquirer and the merchant.

To see more information on the topic of merchant cyber security please see the list below Author’s suggestions and see the video atop this article discussing EMV cards.