American Credit cards have used the same magnetic strip technology for over 50 years, but starting next year the U.S. will finally catch up with the rest of the world by upgrading to computer chips. The overhaul, which will cover all 1.2 billion credit and debit cards in the U.S., isn't expected to get underway for another 18 months or so, Bloomberg reports.
Why is the U.S. so behind the times? And why are we finally making the switch now? The reason for the latter is actually due to recent credit card hacks, such as the one that rocked Target earlier this year, eventually forcing the company's CEO to step down after over 70 million account numbers were exposed. Magnetic strips are actually pretty easy to counterfeit, and while most of Europe and Asia have already moved on to more secure chip-and-PIN solutions, America has yet to catch up.
Updating America's system doesn't just mean replacing all those credit cards, though. Most retail card readers will need to be upgraded along with pretty much every single ATM. To encourage those upgrades, retailers will be responsible for any fraud that happens if they don't swap out the old machines.
The upgrade definitely won't be easy, and Bloomberg notes that when the same thing happened in the U.K. back in 2005 it took a huge Government-led effort, including TV commercials and billboards, to get the job done in a single year. In the U.S. the entire thing will unfortunately be less organized and could take as long as three years to complete. In the end though, it will be worth it if we can avoid more massive credit card hacks like the ones we've seen in the past few years.