Robin: Wayne, some stores have “target” in their names, such as Target. But what if your business or your online retail operation isn’t a target and doesn’t want to be a target for people stealing your customers’ credit card information. What should we do?
Wayne : Well, I am told that the proper pronunciation for the store’s name according to my daughter is “Tarjay,” I guess, that makes it sound more upscale. The way to avoid being a target for that particular exploit is to not use the magstripe on a person’s credit card. The way to get around that is by using the chip and PIN capabilities, which is available from most credit card companies. They provide a credit card that’s got a little chip in it and they scan that and then you enter a PIN. Sometimes you may end up also signing for it. However, that means that the magstripe information is not available for cloning.
What’s happening with the Target exploit was that people were copying the magstripe as the card was passed through the reader and then using that to build a new cloned credit card, which they then used to go out and buy stuff. With what they call the EMV chip, you can’t clone that. The chip itself is encrypted and even when you get the information off of it, you can’t use it to either make a magstripe or a new card with a chip in it. So that prevents that particular kind of exploit.
Robin: So, really we cardholders have to rely on our card issuer, the bank, the credit union to handle that?
Wayne : Well, you can ask for the chip to be put in your card and if you get one, then you can use that instead of the magstripe in some stores. But you got to have a store that uses that. The readers are available from the credit card clearing companies. Some big retailers, notably Walmart, already have all the readers they need and already have the software in place, and if you present them with a card that’s got the chip in it, they read the chip, not the magstripe.
Robin Miller : How do we know which retailers have that capability and which don’t or can we or do we?
Wayne : You ask. When you go to them say, can you do the chip and PIN or can you read the chip that’s in my card and they can. I went to Walmart the other day to replace some light bulbs and they were able to read the chip that was in my credit card.
Robin: Well on the other side, my wife is a Target fan, I’ll admit and she gets prescriptions there. And she immediately, when she read about this, she went to our credit union. We use a smallish, local, very friendly and low fee credit union. And they told her, don’t worry about it. They said just keep an eye on your account and if you see any weird charges, the charges you or your husband ever made, let us know and we’ll cancel it after the fact. They said that they hadn’t had any of their customers at Grow Federal Financial, none of their customers have been hit yet, and they’ve a lot of Target shoppers, is this the case do you think?
Wayne: Well, obviously, the people who took the credit card numbers took 40 million credit card numbers. There’s a fairly good likelihood they are not going to use all of those magstripe copies that they got. So your chances of getting your number taken and somebody using it to make a cloned credit card are relatively low just because of the sheer numbers involved.
However, there is a couple of things you should remember when you’re using a system like that. One of which is do not use an ATM card to buy things at Target or any other retailer even if you have a good idea that the card reader is not being skimmed because they can take the magstripe information without using the card reader, without changing the card reader, they can do it directly out of the system. So if you are going to use an ATM card, use it in a bank and only at a bank .
Robin: Really, because all we have is a Debit/ATM card.
Wayne: Get a credit card then.
Robin: Okay. I take that back, we have a credit card, we just never use it.
Wayne: Well, a credit card gives you significant legal protection that you don’t have with ATM cards. For example if they find a bogus charge on your ATM card, they will give you the money back eventually. In the meantime, you have no money and you have to wait till they get around to it and it may take them several days to do so. You will get the money back from most banks or credit unions but it may not be right away. So while it’s happening, you’re basically broke.
The credit card on the other hand, those charges ____5:09. There’s federal law that protects you. Even if the bank who issues the credit card won’t protect you, you are still limited by federal law to a loss of no more than $50 and almost every card issuer actually protects you completely. So, even if you only use the card to buy things, well if you pay it off immediately, you’re much safer using a credit card than an ATM card.
Robin: Okay. Our credit union says that they back their ATM/cash cards, same as the credit card that they run through Visa. And they told us not to worry, but this may be just this local out in MacDill Air Force Base in Tampa Credit Union.
Wayne: It may be. And the fact is, is that you are exposing yourself to that kind of a loss. The other thing quite frankly is with an ATM card, you also find yourself subject to periodic brief holds on your money at gas stations.
Wayne: And you don’t have credit cards either.
Robin: Okay. What about from the merchant side? So, assuming I’m a merchant whether online or off, or a combination, aside from getting the newer readers, what can I do to make my customers safe?
Wayne: Well, getting the newer readers is really the most important thing you can do. Nobody is really quite sure at this point how the hackers got into Target. Target’s probably not saying even if they know and right now, they may not know how it happened. So, to some extent, if a big company like Target that presumably has good security, got their credit card readers broken into, it could happen to most anybody.
The biggest thing you can do for your small businesses to feel comfortable is the fact that you’re probably so small that nobody is going to bother with you because they are not going to make enough money off of your 15 customers that day.
Robin: So, being small then is an advantage?
Wayne: Yeah. They’re not going to waste a lot of resources on you because they’re not going to get enough out of you to make it worth the trouble.
Robin: Well, my wife and I have a business that’s our umbrella for writing and she sells some art, but not big We just process everything – a lot of stuff is checks, we just got one today from one of my writing clients, but we run our credit cards through PayPal, we lay off the risk.
Wayne: You’re not using a card reader. You’re just putting the number directly into PayPal.
Robin: That’s correct.
Wayne: And because of that, there is no way for anybody to infect your card reader because you don’t have one.
Robin: Right. But we might get what are those square card readers.
Wayne: The square card readers don’t work with chips. They currently only work with magstripes.
Robin: So, they are vulnerable?
Wayne: Well, theoretically, but remember, there is the issue of scale. Unless somebody broke into PayPal, which could happen, but it’s unlikely, but it could happen – then again Target was probably unlikely also – they’re not going to be able to infect your card reader. They are either going to have to get it from you or they are going to have to get it from PayPal and you’re probably too small to be worth the trouble.
Robin: I would say we run about 5 charges a month, so.
Wayne: They’re not going to bother with you. However they might decide to bother with PayPal. But that’s one of the situations where if they break into PayPal, they’d get credit card numbers out of that. That’s a different problem. And because of the type of card reader you have, again because of the sheer scale, they’re probably not going to bother getting the magstripe information because it’s just not worth their trouble. However, that doesn’t mean they can’t; it just means they probably won’t.
Robin: So basically, as individuals, a) we want to use credit cards rather than ATM or cash cards whenever possible.
Robin: As merchants, we rely on a fact that we’re tiny, primarily, and if we do have physical card readers, we get the new ones that can handle the chipped cards.
Wayne: If you can, yeah. You have to talk to whoever is your credit card processor because they may not offer those. Not everybody does. However you may also find out if you are a person who travels outside the United States on a regular basis that you’re going to need the ability to handle a credit card with a chip because once you get outside the United States, you may not be able to use it otherwise, especially for things like cash machines, for unattended things like kiosks and so forth, the chip is getting pretty much ubiquitous and pretty much required. If you’re not somebody who goes outside the United States, then it is a different story. The magstripe is going to be here in the US for a while. But I think after the Target situation, you are going to see a change pretty fast.