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Target's 46% Drop in Profits Means America Is Finally About to Meet Chip-and-PIN Credit Cards

NEW YORK ( -- To improve the security of its debit and credit cards, Target will begin issuing chip-and-PIN cards in early 2015.

The company said last week that it will replace its entire REDcard portfolio, including all Target-branded debit and credit cards, with cards that contain a computer chip and require the cardholder to enter a PIN. The cards will be enabled with MasterCard's chip-and-PIN solution.

This change will make Target one of the first retailers in the United States to switch to this technology. Chip-and-PIN cards are common in Europe.

Experts believe the chip-and-PIN card is much more secure since it is hard to duplicate and a thief must know the cardholder's PIN to complete a transaction. According to a Retail Payments Risk Forum study, fraud losses in the United Kingdom since widespread adoption to the these cards in 2004 has decreased 34%.

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In the United States, there has been reluctance to change from the magnetic strip credit card to the chip-and-PIN card due to the cost. Target says it will spend $100 million to make this switch, including the installation costs of new payment terminals in all 1,797 stores by September.

Target was the subject of a massive card breach that affected as many as 40 million people who used their credit or debit cards in a Target store in the three weeks between Black Friday on Nov. 27 and Dec. 15, the busiest shopping time of the year.

The breach seems to have had a dramatic impact on the company's profits. In its latest quarterly profit report, Target showed a 46% drop in profits from when compared with a year ago.

Bill Hardekopf is chief executive of, which compares and rates more than 1,000 credit cards. He is the co-author of "The Credit Card Guidebook."

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