The foggy future of smart cards and mobile wallets in the United States

After one of the largest identity theft busts in United States history concluded, Consumer Reports suggests that thieves took advantage of out-of-date credit card technology. Credit card skimmers and identity theft experts can easily copy the magnetic stripe on the backs of cards. The United States and some unindustrialized African countries are the last remaining nations that still depend on magstripe cards, a payment method introduced to the U.S. in the 1970s, CR states. Most countries now use smart cards, which include a computer chip that stores and transfers encrypted data. According to CR, during the first year smart cards were used in France, fraud losses declined by 50 percent and counterfeiting instances dropped 78 percent. Technologically, our phone systems and computers have advanced significantly over the past 40 years. Cloud operating systems today allow users to access and download files with a WiFi connection. Electronic wallets, which are popular in Europe, give consumers the option of making credit payments by passing their mobile phones through a scanner, negating the need to swipe a credit card. But the United States seems hesitant to fully engage the medium. Mobile wallets require the consumer to input a PIN following the initial scan of the device, which is a far more secure process than the current method practiced in the United States. John Hall, American Bankers Association spokesperson, told The Huffington Post that banks in the United States haven't implemented smart cards because it requires costly upgrades to their payment systems. Gregory T. Antonsen, commander of the New York Police Department Identity Theft Squad, told Consumer Reports his agency urges the use of more secure payment methods. "We’ve recommended to several of the large financial institutions that the biggest deterrent to skimming would be using the kind of cards that are issued in Europe and Canada with a chip that makes them pretty much impossible to skim, but so far they seem unwilling to do that," Antonesen said. If the recent scandal in Queens, New York, doesn't budge the American financial institutions to implement upgraded credit card systems, the fact that 32 percent of United States consumers have reported card fraud in the past five years might, according to ACI Worldwide.