The U.S. credit card industry is losing $18 billion to preventable fraud, according to Brett King, CEO of Moven and best-selling technology futurist. The cause of this loss? The country is failing to adapt to European credit card standards.
King claims that American credit companies are not doing all they can to prevent massive credit card data breeches like recent incidents at Home Depot (HD) where 56 million customer credit and debit card accounts were compromised or Target’s (TGT) breach where 40 million card accounts were breached.
Chip and pin technology helps to prevent this fraud, and many credit card companies are slowly beginning to adopt this instead of magnetic stripes. King, however, believes credit card companies need to employ tokenization. “What we now realize is that the 16-digit number that you have on the front of your card is no longer securable. You can’t protect it,” says King. CVV’s and other security numbers on the back of the card are also failing to protect the consumer from fraud.
King sees the credit card industry move towards a one-time use token system where each transaction issues a unique identifying number. This is why mobile banking works best, says King.
“Mobile allows us to track you in terms of location, where your phone is compared to where the merchant is…we can secure your transaction with biometrics like your finger print and facial recognition…mobile is five, six, ten times safer than the plastic we carry around in our wallet today,” says King.
The shift to mobile may seem less secure to some, but King asserts that isn’t the case—and that Millennials will easily adapt to this safer form of payment. “They’re quite adaptable…if they find something isn’t secure they’ll respond very quickly with modifying their behavior,” he says.
Meanwhile, says King, older generations just want to try to make magnetic stripe credit cards more secure because that’s what they’re comfortable with—which leads to more fraud. “Millennials will have less of a hard time in dealing with security issues,” he says.