US credit, debit card technology outdated?

This is a rush transcript from "Your World," December 23, 2013. This copy may not be in its final form and may be updated.

ERIC BOLLING, GUEST HOST: So, you want to stop credit card breaches in the U.S., then start looking to Europe?

Yes. In Europe, Mark Rasch says while we are still using 20th century technology here, Europe is using 21st century innovation, and hackers know it.

What do you mean, sir? What`s the difference between what we`re doing here and what they`re doing in Europe?

MARK RASCH, FOUNDER, RASCH TECHNOLOGY AND CYBERLAW: Well, right now, if you have a credit card that you use in the United States, the only secure you have on it is that little magnetic stripe on the back of the card. That keeps the information that`s on the front of the card. In Europe, what they have is what is called chip and pin technology, so there is an actual chip embedded in the credit card, and you have to put a pin number in. So, typically, when you think about security, it is something you have, the card, something you know, the pin. That is what they use in Europe. We only use the card.

BOLLING: OK. So why wouldn`t our retailers, why wouldn`t our banking, financial institutions move to the chip and pin?

RASCH: Well, there are a lot of reasons.

The first one obviously is cost. You would have to replace all of the credit card terminals all over the United States to these chip and pin readers.

The second reason is convenience. You know, you have these news things like Square Reader that you can plug into your phone and just swipe a card, whether you are taking credit cards at a flea market or whatever, those things won`t work with chip and pin technology.

And the third thing is if the chip and pin doesn`t work, those just default back to the old credit card reader anyway. So what hackers will do is, they will find a way to get it to default back into the regular credit card and make it work just like the security we have here in the United States.



RASCH: So it is a large expense.

BOLLING: Mr. Rasch, it sounds like we`re -- we`re being a little short-sighted here in America, because the -- the credit card fraud is in tens of billions, right?

RASCH: It is.

And -- and this will reduce some forms of credit card fraud, particularly the kind that happened with Target. Once they steal these credit card numbers, what they want to do is manufacture these new cards. With chip and pin, it is much harder to do that than it is here.

But there`s all kinds of other kinds of fraud. And we are always moving to new payment technologies. Eventually, we`re going to get rid of the credit card entirely and use something different.

BOLLING: Oh, I -- I`m afraid of knowing what that is, some sort of digital eye scanning or -- or fingerprint.

We`re going to have to leave it there. Mark Rasch, thank you very much.

RASCH: Thank you.

BOLLING: All right.

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