NEW YORK (TheStreet) -- MasterCard (MA) and Visa (V) were both rising slightly in early afternoon trading after the two credit card companies announced the creation of a cross-industry group to fortify payment system security across networks.
The joint venture comes after security breaches at multiple U.S. retailers, most notably Target (TGT) in late 2013 that involved the theft of 40 million credit and debit card records. The new group will incorporate representatives from the retail, financial and equipment manufacturing industries.
The group will initially revolve around 'EMV' chip technology in the U.S., according to the companies' statement. Europe and Asia already use EMV, which stores information on computer chips rather than on the typical magnetic strips on credit and debit cards. EMV stands for Europay, MasterCard and Visa, the companies that initiated the technology.
The two companies set a deadline of Oct. 2015 for U.S. companies to adopt the EMV technology, which is more difficult to counterfeit and which would offer better encryption to protect data. EMV cards could also mandate users to input personal identification numbers for extra security.
Banks and retailers, though, have taken their time with the mandatory upgrade thanks to debate over which entity should handle the cost, which experts say could be as much as $10 billion, according to Reuters.
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"We rate MASTERCARD INC (MA) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, expanding profit margins, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value."