Obama announces plan to tighten card security

Saying more must be done to stop data breaches affecting consumers, President Barack Obama announced Friday a government plan to tighten security for the debit cards that transmit federal benefits like Social Security to millions of Americans.

Cards issued by the federal government will now have an internal chip replacing magnetic strips to reduce the potential for fraud. Concern is growing over the security of Americans’ financial data, with an estimated 100million people having been affected by breaches in the past year, including at big retailers like Target and Home Depot.

In addition, the government will apply the security chips and personal identification numbers that replace signatures to all existing and newly issued government credit cards, Obama said. Payment terminals at federal government facilities will be equipped to handle cards with the new technology.

In remarks at the federal Consumer Financial Protection Bureau, Obama said that for victims of fraud and identity crimes, the experience is infuriating and heartbreaking. He said the problem requires a hands-on approach across the government.

The White House says the idea of the government program is to lead by example, to nudge the broader financial industry and retailers toward more secure standards.

Obama noted that Home Depot, Target, Walgreen and Wal-Mart plan to install payment terminals in their stores equipped to handle cards with digital security chips and personal identification numbers, called PINS, that replace signatures.

Obama also cited a plan by American Express to support small businesses that upgrade their payment terminals with more secure standards, and a program by payments processor Visa to inform consumers and merchants about the new technologies.

“There is a need to act, and to move our economy toward stronger, more secure technologies that better secure transactions and safeguard sensitive data,” the White House said in a statement.

This story was originally published October 17, 2014 at 6:28 PM with the headline "Obama announces plan to tighten card security."