Smart card days hve not come yet in USA
November 1, 2010
Smart cards may sound cool and exciting, but
they might not be able to replace current credit
cards just yet, according to The New York Times.
Even though smart cards have been around in their
modern form for at least a decade, they are just
starting to take off in the United States. Smart
credit cards carry embedded integrated circuits
that allow the card to hold memory instead of
just acting as a standard form of payment. In
Europe, the health insurance and banking industries
use smart cards extensively.
Traditional credit cards are still in the running
as the card of the future, according to The New
York Times. While standard magnetic-stripe cards
work with any of the approximately 13 million
magnetic-stripe readers in the U.S., “smart
cards” can only be processed by about 600,000
of the readers
Traditional card proponents believe that by
keeping cards dumb and security centralized, the
company can easily upgrade its central system
at any time; changes take effect throughout the
The biggest issue that divides critics is security.
The magnetic stripe on credit cards is relatively
easy for criminals to copy compared to those of
some smart cards, which avoid this issue with
the chips embedded within the card. The problem
smart card issuers face is a lack of incentive
for retailers or consumers to make the switch.
Retailers would need to replace their card readers
as different upgrades became necessary to make
smart cards appealing.
Americans traveling abroad have reported numerous
problems with machines and merchants that no longer
accept our cards.
Almost 10 million U.S. cardholders experienced
credit card acceptance problems abroad in 2008,
costing banks $447 million in lost revenue, according
to a study released last year by Boston research
firm Aite Group.