If you shop at Target (TGT) or Neiman Marcus, and if you dine at P.F. Changs you may know first hand the pain of having your credit card information compromised. Those are just three of the most recent high-profile companies to be at the center of information breaches. While they try to re-secure their systems the credit card industry is trying to do their part as well, namely with new cards equipped with microchips that are billed as more secure than that good old magnetic strip.
So how is the chip actually different? Right now when you swipe your card your information is sent from the credit card machine to a computer in the store you are buying from and then to the card company. Should a hacker or fraudster get that information it is enough for them to create a fake card or use online over and over again until you shut down the card.
A chip card on the other hand generates new information for each transaction so that a fraudster who gained your card info when you bought a sweater at Old Navy could not use that information for any other transactions there or in any other store.
Sounds great, and it certainly solves one of many problems with credit card fraud. Still, as Carolyn Belfany, senior vice president of product at MasterCard (MA) admits in the video above, there is no silver bullet.
Chip cards offer you no more security online than a magnetic strip card does. Even the cards themselves aren’t completely fraud proof. After the Target breach last year security journalist Brian Krebs told NPR the chip cards “simply raises the costs for the bad guys…It’s not that they can’t break the system — but it makes it more expensive for them to fabricate these cards.” Regardless, you’ll soon be seeing a lot more chip cards across the U.S.
If you’ve traveled internationally you may have noticed that the magnetic stripe that is so ubiquitous on American cards is seldom used. Card companies, banks and credit unions have already made the switch.
“It’s not a short process,” Belfany says. “What people don’t know is that the industry has been working together for about two years to start to affect the migration. And so banks are beginning to issue cards to consumers across the U.S. and retailers are beginning to change out the terminals.”
The big goal for all parties involved is to have much of the new technology in place by October of 2015. Such a move would certainly serve the consumer well, but card companies and banks aren’t making the shift out of the goodness of their hearts. October 2015 is the date that new liability rules go into effect when it comes to fraud.
Right now much of the liability falls to the credit card companies and not the merchants where the fraud takes place. Under the new rules the liability will fall to whomever has the least up-to-date technology. It’s therefore in card companies’ best interests to get the newest and most secure cards into your wallet.
Belfany says that by 2015 50-60% of the cards in the U.S. and the credit card terminals in stores will be transitioned. You’ll still be able to swipe that magnetic strip for years to come as the industry can’t possibly jump to 100% acceptance overnight, but many large retailers are ready and many more expect to be by October of 2015.

 

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Income inequality has been a hot button issue of late. While many big earners on Wall Street, and elsewhere in the financial industry, may not fully grasp the plight of workers, Pimco’s Bill Gross is not one of them and the wage discrepancy concerns him.
“It’s a fundamental factor that will influence not only the U.S. economy, but global economies going forward… It will be destabilizing,” the PIMCO founder and CIO told Yahoo Finance’s Lauren Lyster.
“Labor and capital have to share in the rewards of a productive economy and for the past 25 years labor has gotten the short end of the stick.” Gross suggests that Henry Ford had the right equation when he doubled workers’ wages 100 years ago. “Ford knew way back when, when he paid five bucks an hour to his workers in Detroit, that workers buy cars and that if they were earning a dollar an hour as opposed to five they wouldn’t be able to afford a Ford.”
Gross says we are in need of policies that bring the balance between capital and labor back. “Minimum wage, higher taxes on the rich and all that in combination,” he suggests.
“Ultimately wage earners have to earn a decent wage or else capitalism can’t continue in a productive way.”

 

 

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