STORES Magazine - December 2014 - (Page 8)

n PRESIDENT'S PAGE Last Holiday Season for Fraud-Prone Credit Cards? by MATTHEW R. SHAY W atch closely as shoppers swipe their credit and debit cards this month - concerns over data security could make 2014 the last holiday season for cards as we know them. Swiping a card and signing the receipt has been a muscle-memory reflex for consumers for decades. But that's the problem - cards still use 1960s technology despite 21stcentury cyber threats and criminals who use the Internet to steal money from half a world away. The good news is that the card industry plans to roll out new cards in 2015 that will replace the easy-to-copy magnetic stripe with a sophisticated computer microchip that is far more difficult to counterfeit. Chip-based "EMV" cards are used in 80 countries and have reduced fraud as much as 75 percent. The bad news is that U.S. banks don't plan to replace the signature with a personal identification number the way banks have in the rest of the world. Rather than "chip-and-PIN," they are calling the new cards "chip and choice." That's a mistake because the PIN is a crucial part of the fraud reduction seen elsewhere. The chip ensures that the card is legitimate, but the PIN is needed to ensure that the person trying to use it is the legitimate cardholder. In today's world of high-tech criminal hacking, an easily forged, illegible scrawl at the bottom of a receipt is no longer good enough. NRF has argued for years that PINs should be required. Chip cards will improve security, but without the PIN they offer only half the improvement they could provide. The debate took a major step in the right direction this fall when President Obama announced that all credit cards issued to federal workers will be required to be chip-and-PIN beginning in 2015, along with prepaid debit cards issued to recipients of Social Security and other federal benefits. If banks are going to put both chips and PINs on millions of government cards and set up the infrastructure to use them, there's little excuse not to put them on all cards. New cards are just one of the solutions being explored to avoid a repeat of the hacking incidents during the 2013 holiday season that put data security on the front page. And the need to act is growing: Despite security concerns, NRF's annual survey finds 76 percent of shoppers plan to use a credit or debit card this holiday season, up from 72 percent last year and the highest level in the survey's history. Retail accounts for only 11 percent of hacking incidents, compared with 34 percent at financial institutions. Nonetheless, protecting customers' private information is one of retailers' top priorities. That's why our industry is committed to making sure the job is done right. This holiday season is the beginning of the end for outdated cards. Let's make sure it's also the end of trying to do the job halfway. STORES is published by NRF Enterprises Inc., a subsidiary of National Retail Federation Inc., 1101 New York Avenue, NW Suite 1200 Washington, D.C. 20005. 202/783-7971 FAX 202/737-2849 CHAIRMAN OF THE BOARD Stephen I. Sadove, Chairman and CEO, Saks Inc. (retired) VICE CHAIRMEN Kip Tindell, Chairman and CEO, The Container Store Mindy Grossman, CEO, HSNi PRESIDENT & CEO Matthew R. Shay SENIOR VICE PRESIDENTS Vicki Cantrell, Communities Ellen Davis, NRF Foundation Mallory B. Duncan, General Counsel David French, Government Relations Michael G. Gatti, Member Relations Carleen C. Kohut, COO Susan Newman, Conferences Bill Thorne, Communications & Public Affairs NRF DIVISIONS EXECUTIVE DIRECTOR Tom Litchford 202/626-8126 EXECUTIVE DIRECTOR Rob Green 202/626-8187 EXECUTIVE DIRECTOR Vicki Cantrell 202/626-8195 1101 New York Avenue, NW Suite 1200 Washington, D.C. 20005 All articles published in this magazine represent solely the individual opinions of the writers, and not necessarily those of the National Retail Federation. 8 STORES December 2014 NRF.COM/STORES http://www.NRF.COM/STORES

Table of Contents for the Digital Edition of STORES Magazine - December 2014

Forward Focused
Retail People
Editor's Page
President's Page
Retail Politics
NRF News
NRF Communities Update
End Cap
Business Operations
Inventory Management
Customer Relations
Store Operations

STORES Magazine - December 2014