Safer Consumer Transactions May Be In The Cards

Credit is reporting on how, in the aftermath of the recent high-profile hacking incidents over the past year, technology is being developed to further security for credit card purchases.

The hacks perpetrated against the likes of giant retailers such as Michaels, Neiman Marcus and Target have opened a view into the multi-million dollar business of credit card attacks designed to steal credit and debit card data at the point of sale.

As the only full-service point of sale (POS) provider — from software development to franchise incubator to ongoing support — part of Sintel’s commitment to our customers and industry is to share ideas and information. Whether you’re a first-time franchise hopeful, a small business owner or an established chain, it’s always smart to stay on top of the latest POS best security practices to achieve financial success.

Forbes says the FBI has warned retailers that more attacks are likely to come in an article titled “Can New Technology Make Credit Cards Safer?” 

Here are some of the highlights of the post:

• Forbes writes that while the technology for detecting credit card fraud is getting increasingly sophisticated, experts say the swipe technology that’s still so broadly used today for credit card transactions is hopelessly outdated.

• The current magnetic-strip “swipe” systems in existence for at least 20 years have a lot of controls for detecting fraud, but haven’t worked well against the recent wave of data thefts.

• Fortunately, new and more secure alternatives to swipe systems are in the works.

Tokenization replaces sensitive payment data with a unique token, which may be stored or transmitted securely because the token cannot be mathematically reversed. “The token is valueless if intercepted, but can be converted back into usable information by the proper parties,” says Andrew Szente, a trade organization executive familiar with tokenization and quoted in the Forbes piece. “Ideally tokenization would occur at the terminal and carry through the entire transaction.” 

Point-to-point encryption protects sensitive data at each stage: first card swipe, while in transit, and arrival at the payment processor. These systems require new merchant card readers and must earn certification from the Payment Card Industry.

Chip and PIN technology places an imbedded microchip into cards, which may then be authenticated automatically with a PIN. At the point of sale the customer pays with a card reader either placed into a terminal, or a modified swipe card reader. The reader accesses the microchip on the card and matches it to the PIN entered by the purchaser. The transaction continues only when the numbers match.

• These technologies are here today. Chip and PIN has been adopted in many European countries for decades. reports one estimate that 30 percent of large retailers are planning to upgrade to chip-card acceptance and point-to-point encryption. Both Visa and MasterCard have announced broad-scale migrations beginning in October of 2015.

• According to the Federal Reserve, adding a PIN to debit cards makes them seven times more secure than just a signature. And yet, banks resist despite the fact that most retailers could easily accommodate a PIN requirement. Szente says, “Issuing banks have discouraged PIN [use] historically because they are able to charge merchants more on transactions that occur without a PIN.”

• reports that in January, Szente’s employer, the Retail Industry Leaders Association, called for collaboration across the debit and credit card markets to require PINs on all retail transactions, the retirement of antiquated magnetic stripe systems, and a migration to chip and PIN technology.

• Current and older cards are seen in the industry as having three-year lifespans, so look for replacement cards with these new technologies in the months ahead.

Read the full post here.

Just as we share our vast point of sale experience and expertise with startup owners in order to help them make the best decisions from the very beginning, we at Sintel Systems are happy to share articles, advice and commentary about retail point of sale and security.

Whether you’re a first-time franchise hopeful, a small business owner or an established chain, it’s imperative to stay on top of the latest point of sale best security practices to achieve financial success.

If you are interested in learning more about Sintel’s point of sale systems and how our knowledge and support can impact your future success, call us for a complimentary phone consultation.

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