The little black strip that’s prominent on the back of consumers’ credit cards have been there since they first started being issued by lenders decades ago.
But now fears about the security of data stored on 
the antiquated technology has led Visa and MasterCard, the world’s two largest credit card issuers, to begin more heavily encouraging businesses across the
U.S. to adopt the type of credit card security system in place in many other nations around the world, according to a report from the consumer finance site Bankrate. The new system, named “chip and pin” because payment data is stored on a microchip embedded in the card and users have to enter a code to confirm purchases or withdrawals, is in use in most countries across Europe, Asia and Central America.
Chip and pin is also far more secure than the current American standard of magnetic strips because the information is much harder to both gain access to and copy, the report said. This is because the microchip encrypts the payment information differently every time a transaction is made. In fact, a report on card security in the United Kingdom published earlier this year found that counterfeit credit card fraud has dropped 63 percent since 2004, largely as a result of the switch to and widespread of chip and pin cards.Experts believe that there’s a pragmatic reason that U.S. credit card issuers haven’t also made the switch, the report said.
“The U.S. is behind for a very simple reason: Consumers have not been asking for chip cards,” Bill McCracken, CEO of Synergistics Research Corp., an Atlanta-based marketing research firm for the financial services industry, told the news site. “They have not understood the benefits of a chip card over a mag stripe. So why switch?”
Visa and MasterCard are now encouraging businesses to begin installing card readers that can handle chip and pin transactions, and MasterCard in particular is also encouraging ATM operators to do the same for their machines by April 2013, the report said.
The widespread acceptance of chip and pin cards overseas has led to headaches for some Americans traveling abroad in recent years, as many have had difficulty finding businesses that accept cards with magnetic strips.
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