Target works on security-heavy credit cards, after breach

The retailer accelerates its $100 million program to offer users chip-enabled "smart credit cards" that encrypt users' personal data and are said to be harder to hack.


Target is still reeling from the massive security breach, which affected as many as 110 million customers. Now, as the retailer gets back on its feet, it's becoming more security focused.

Target Chief Financial Officer John Mulligan wrote an opinion piece for The Hill on Monday saying that the company was speeding up its implementation of high-security credit cards.

The credit cards come embedded with a tiny microprocessor chip, which is said to beef up security and make it more difficult for cybercriminals to access user data. Target had already begun work on the cards before the hack, but it is now accelerating this $100 million program. Mulligan said that the technology should be ready for customers on Target's REDcards by early 2015, which is six months before the scheduled release.

"For consumers, this technology differs in important ways from what is widely used in the United States today. The standard credit and debit cards we use now have a magnetic stripe containing the customer's information. When first introduced, that stripe was an innovation. But in today's world, more is needed," Mulligan wrote. "The latest 'smart cards' have tiny microprocessor chips that encrypt the personal data shared with the sales terminals used by merchants. Why is such a change important? Even if a thief manages to steal a smart card number, it's useless without the chip."

While chip-enabled smartcards are already in use in the UK and Canada, the US has been slow to grab a hold of the technology. Mulligan wrote that in the UK credit card fraud has fallen 67 percent since 2004 and in Canada losses decreased by 72 percent between 2008 and 2012. Even though these numbers sound promising, some security experts have questioned how foolproof these encryption methods are -- saying hackers could devise new ways to steal users' information.

The security breach that hit Target was first identified in December and resulted in the theft of names, mailing addresses, phone numbers, e-mail addresses, and debit and credit card data of people who shopped at the retailer between November 27 and December 15. In an effort to support affected customers, the company offered one year of free credit monitoring from Experian, which is valued at $191.

Target is keen on having other businesses also adopt the use of chip-enabled smart cards. In his opinion piece, Mulligan said that companies must work together to fight credit card fraud.

"If we truly want to prevent this from happening again, the business community must move together. No one company or industry can solve this challenge on its own," he wrote. "Strengthening consumer protection requires a coordinated response.This is a shared responsibility."