We're Paying for a Lack of Security
The constant drumbeat of security breaches is taking a toll on consumers, according to a new study conducted by NXP Semiconductors. The report, "Security Matters," found that after hearing about security breaches at large retailers, 64 percent of Americans are more likely to pay in cash than use credit or debit cards. Millennials are more likely than other age groups to use cash for purchases.
At first thought, this response may seem highly reactive, but I'm beginning to think it's actually quite rational. Over the last couple of years, online and electronic security has descended into a netherworld of frustration and aggravation. I've actually considered reverting to cash for most purchases and buying things only from physical stores. Things are that bad!
I was forced to change the account number for a credit card following the Target breach. That devoured about two hours of time, including updating Websites and autopay accounts. On two other occasions in the last year, the bank demanded that I change my card number, but I steadfastly refused because attempts at fraud were unsuccessful.
Remarkably, when I asked the rep if the bank, in this case Chase, would send out cards with a new CID (Card IDentification) code, I was told that isn't possible—even though the bank updates the codes every time the cards expire.
It's probably only a matter of days or weeks until the next incident occurs. I'm supposed to have confidence in this system?
Unfortunately, cash isn't a whole lot better. ATM skimmers are everywhere, thieves now attach pinhead cameras to ATMs to capture data, and it's mindlessly easy to steal PINs and passwords from dozens of feet away using specialized software or Google Glass.
Banks, casinos and other institutions have already started to ban smart glasses. But even a basic video with a standard smartphone or tablet is enough to capture a person's credentials.
Digital technology isn't going away. In fact, it will become even more powerful and pervasive over the next couple of decades. But if the emerging Internet of things is going to reach its potential, and IT is going to create a future that's more utopian than dystopian, we had better start thinking about how to address security problems now. And that requires much better password systems, antitheft detection, and chip and PIN cards. An erosion of trust doesn't benefit anyone, and it undermines marketing initiatives that involve loyalty programs and analytics.
When nearly two-thirds of the public is back to using cash for purchases—even temporarily—something is incredibly wrong with our security systems and processes.