President Obama signed an executive order Friday requiring all government-issued credit and debit cards to use microchips instead of magnetic strips as part of an effort to prevent identity theft.
American Express, Visa, Walmart, Home Depot, Target and Walgreens said they would join the effort to make chip-based cards available, the White House said.
The executive order also requires the federally issued cards to start using personal identification numbers, or PIN numbers.
Though the executive order applies only to a relatively small number of government cardholders, the intention is to help spur private industry to adopt the new standards.
“We know this technology works. When Britain switched to a chip and pin system they cut fraud by 70 percent,” Obama said during a press conference Friday at the Consumer Financial Protection Bureau.
The new government cards will start to being issued at the beginning of next year, the president said. Retailers such as Walmart would start updating their credit readers to use the new cards next year, while American Express and Visa would promote the idea and help smaller retailers adapt. Microchip-based cards have been widely used in Europe and Asia for years.
The administration also said it would also streamline measures for reporting fraud and applauded efforts by credit card companies such as Citi to make it easier for customers to acquire their credit scores.
The announcement comes after several high-profile data breaches over the last year and half involving major retailers such as Target, Home Depot and, just last week, Kmart.
“In light of these data breaches, securing consumers’ peace of mind is more important than ever,” said CFPB director Richard Cordray.
Obama also called on Congress to pass cyber-crime related legislation that clarifies what steps companies must take after data breaches and “appropriately balances the need for greater information sharing and strong protection for privacy and civil liberties.”
“Even though I am taking executive action without Congress, Congress needs to do its part too,” Obama said.
The announcement comes as the president’s party heads towards a midterm election in which polls show it has a good chance of losing its Senate majority. Democratic leaders have been eager to find issues they can tout in the election to counter the turmoil overseas and the Ebola scare.
Obama himself alluded to it at the beginning of his remarks: “Now, obviously, right now the news is dominated by Ebola. We’ve got an all-hands-on-deck approach across government to make sure that we are keeping the American people safe.”
