Target Switching to Chip-and-PIN Cards after Massive Breach

April 30, 2014, Written By John H. Oldshue
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In order to improve the security of its debit and credit cards, Target will begin issuing chip-and-PIN cards in early 2015.

The company said yesterday that it will replace its entire REDcard portfolio, including all Target-branded debit and credit cards, with cards that contain a computer chip and require the cardholder to enter a personal PIN. The cards will be enabled with MasterCard’s chip-and-PIN solution.

This change will make Target one of the first retailers in the United States to switch to this technology. Chip-and-PIN cards are common in Europe.

Experts believe the chip-and-PIN card is much more secure since it is hard to duplicate and a thief must know the cardholder’s PIN number in order to complete the transaction. According to a Retail Payments Risk Forum study, fraud losses in the United Kingdom since widespread adoption to the these cards in 2004 has decreased 34 percent.

In the United States, there has been reluctance to change from the magnetic strip credit card to the chip-and-PIN card due to the cost. Target says it will spend $100 million to make this switch which includes the installation costs of new payment terminals in all 1,797 stores by this September.

Target was the subject of a massive card breach that affected as many as 40 million people who used their credit or debit cards in a Target store in the three weeks between Black Friday (November 27) and December 15, the busiest shopping time of the year.

The breach seems to have had a dramatic impact on the company’s profits. In its latest quarterly profit report, Target showed a 46% drop in profits from when compared to a year ago.



The information contained within this article was accurate as of April 30, 2014. For up-to-date
information on any of the terms, cards or offers mentioned above, visit the issuer's website.