Will This Be A Wake-Up Call For U.S. Banks.....

What Laura said... The USA is supposedly working on the next new/best thing in CC technology, leapfrogging over today's chip-and-PIN, so then everyone else will be catching up to that (sigh). If you stay within your own borders it doesn't matter too much, but it's a pain if you like to travel. "The rest of the world has largely abandoned cards with magnetic strips in favor of ones with built-in chips that are nearly impossible to copy." (emphasis mine) Anytime I read a pronouncement like that, I start the 'how long until h*ll freezes over' clock ;-) Kinda like 'CDs will last FOREVER!!! (years later...) Or, (ahem) 40-50 years or so...we don't really know...(ahem)...'

They'll change when the theft becomes more costly than the change. . . am I right to think it's every sale point, cash point, not just changing the cards themselves? But maybe after the US changes to chips, it will change to the metric system. and then the world will end

$45 million dollars spread out amongst multiple banks, across multiple countries is nothing in this day in age. $45 millions bucks won't even buy you half a sports stadium these days.

Ken, Both Visa and Mastercard have laid out their roadmap for chip and pin, bot it is a multi year effort. technology including POS hardware all needs to be upgraded. Interestingly, one of the reasons that the U.S is behind is that they had much better fraud detection mechanisms in place prior to the introduction of the EMV chip whereas Europe had few. http://corporate.visa.com/newsroom/press-releases/press1142.jsp I guarantee that the technology upgrade is costing far more than $45M

Bank of America now offers chip and pin. I just upgraded one of my two visas and have just received it in the mail. No charge.

Well as a few other people have said $45m is not a lot of money when you take the whole thing into consideration and I would expect it is still cheaper for the US banks to simply compensate the others involved rather than move to the new technology. I think the other issue for the big banks is that they have not made serious cash over the last several years to invest in such technologies. I see it here as well, the smaller banks have offer better services in their online banking applications, use credit card size ID cards rather than the calculator size readers used by the big banks and so on....

I understood that Bank of America's cards are chip and signature, not chip and pin (that they won't work in true chip and pin applications like unmanned gas pumps, etc). Still, there was no cost to you, but definitely a cost to BofA for the upgrade.

While $45 million may not be a lot of money to the Banks, if this starts to happen on a somewhat regular basis, I'm sure they will sit up and take notice. After all, large losses could affect the bonuses and stock options for the Bank C.E.O.'s, so that would be vitally important! Regarding the Bank of America chip card, as someone else mentioned this may be a "Chip & Signature" card rather than a "Chip & PIN". @Chani, "am I right to think it's every sale point, cash point, not just changing the cards themselves?" Yes, that's correct. EVERY POS Terminal has to be replaced with a version that can process the chip cards, and I believe the Bank computer systems also have to be upgraded. One interesting point - when I was in Portland in January, I noticed that one of the POS terminals (Walgreens as I recall) appeared to have a place to in-sert a chip card, but it was covered by a thin piece of plastic. The changeover to the "Chip & PIN" technology seemed to be rather easy here, although some merchants took some time to get on board, as they also had to upgrade their store POS software. That situation seemed to be worse with larger retailers that had numerous branches.

In the long run , the banks will never take a hit for this or anything else . The ultimate payer will , as always , be the consumer . While I must honestly comment that I don't remember where I recently read this , the logic behind it makes sense : The banks ( collectively ) have instituted a deadline ( next year or two ) that would require merchants to upgrade to POS terminals capable of reading Chip and PIN . The downside to merchants who refuse , is that after the bank imposed deadline , the banks would no longer indemnify card holders for fraud or in the misuse of CC's and the responsibility would shift to non participating merchants ( or service providers ) . So , a merchant has two choices ; switch to chip and pin terminals or take a much bigger hit in instances of fraudulent use . What would you do ? Ultimately , any increased costs due to a technology upgrade will be passed on down the food chain . Switching to the newer technology certainly is wise ,for many reasons , but to think that a major bank with multi billions in profits on an annual basis has an incentive about this on the basis of cost , is unrealistic .

@ Ken , As you point out about your experience in Walgreen , I encountered the same thing yesterday in Staples' .There was, in fact , a new POS terminal which the cashier dissuaded me from using with my Andrews chip and pin card . However I'm uncertain about the reason .They may have been unfamiliar with its use , instructed not to use it , or it may not have been ready for use due to incomplete installation to the existing hardware and software systems as you mention .

I do not see what this has to do with U.s. banks or magnetic strips. Mthe two banks whose accounts were hacked we're in Oman and the Emirates, and the accounts themselves were prepaid cards. The hackers manages to get the account codes and override the daily spending limit to get a lot of cash fromATMs all over the world.

Target retail stores in the States had chip-and-PIN POS readers installed about 15 years ago; around 5 years ago they were yanked...I like to think they were reprogrammed for another language, if necessary, and sent to some nice sunny locale where they can live among 'their kind' ;-)

This is a complicated issue. Chip and pin is not a foolproof technology. A couple of years ago the BBC ran a program about the security problems with C&P. US banks are highly regulated. The Federal Reserve Bank has to approve a change to a new system. So the Fed has to be convinced it's better than magnetic strip. One estimate I've seen put the cost of the change to C&P in the US at $5.5 billion. That's serious money. The news reports I've seen said nothing about magnetic strip. Computer hackers were successful in raising account balances on prepaid debit cards which allowed unlimited withdrawals from ATMs in a short period of time.