Researchers reveal security flaw in new chip credit cards

This Wednesday, June 10, 2015 photo shows a chip-based credit card, in Philadelphia. U.S. banks, tired of spending billions a year to pay back fleeced consumers, are in the process of replacing tens of millions of old magnetic strip credit and debit cards with new cards that are equipped with computer chips that store account data more securely. (AP Photo/Matt Rourke)

INDIANAPOLIS (WISH) — Researchers have discovered a security flaw in the new chip credit cards, which are designed to keep your personal information safe. The chip cards have been called “nearly impossible” to hack or counterfeit.

The chip cards still have a magnetic strip, but that strip is supposed to tell the card reader to use the chip.

Computer security researchers at technology company NCR said credit card hackers can rewrite the magnetic strip code to make it seem like a chipless card. This lets hackers gain access to credit cards, just like they did before the chip card roll out.  CNN reports the NCR researchers presented their findings at the Black Hat computer security conference on Wednesday.

The new finding has added to retailers’ long list of complaints about the chip upgrades. The National Retail Federation estimates the upgrade could cost U.S. retailers $25 billion.

According to CNN, the flaw is possible because retailers are not encrypting chip card transactions. Vendors that sell the card readers told CNN the machines don’t have encryption by default. Retailers will have to pay more to encrypt the transactions, and prevent possible security breaches.

Experts said customers should always monitor their online credit card statements and use their phone or smartwatch to pay if possible.

CNN contributed to this report.

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