WASHINGTON U.S. President Barack Obama signed an executive order on Friday to beef up security measures for federal credit cards, and urged banks and retailers to follow suit in an effort to combat the growing threat of identity fraud.
The order, which Obama signed before a lively, packed crowd of regulators at the Consumer Financial Protection Bureau, will add microchips and PIN numbers to government credit cards and debit cards starting in January.
The president also announced that several major companies will take steps to make their own systems more secure and offer more customer protections.
"The idea that somebody halfway around the world could run up thousands of dollars in charges in your name just because they stole your number, or because you swiped your card at the wrong place in the wrong time, that’s infuriating," he said.
Obama's executive order comes after many large companies including Target (TGT.N), JPMorgan (JPM.N) and Home Depot (HD.N) have suffered high-profile cyber security breaches.
The White House said that Home Depot, Target, Walgreen WAG.N and Wal-Mart Stores (WMT.N) will roll out secure chip and PIN-compatible card terminals in all their stores, most by January.
In addition, American Express (AXP.N) plans to launch a $10 million program to help small businesses upgrade sale terminals. Visa (V.N) will invest in education programs about microchips, Mastercard (MA.N) is offering free online identity theft monitoring and Citi Cards (C.N) will partner with FICO to make free credit scores available.
Bank and retail industry groups have been at odds for years over how to improve the security of electronic payments. The recent data breaches have made the dispute more prominent.
Banks have wanted retailers to bear more of the costs of replacing cards after breaches occur, while retailers said banks had been slow to adopt new technologies.
But both sides welcomed the news of Obama's executive order. In statements, the American Bankers Association and the National Retail Federation each said they supported the measures.
Obama said he hopes Congress will "do its part" and pass cyber security legislation to create a national standard for handling data breaches.
Obama signed the executive order at the headquarters of the CFPB, created by the 2010 Dodd-Frank Wall Street reform law to protect consumers from predatory lending practices.
After signing the order, he joked that even he recently had his credit card declined at a New York restaurant.
"It turned out I guess I don't use it enough. So they thought there was some fraud going on," he said. "Fortunately, Michelle had hers."
Obama has signed a series of other executive orders, such as on minimum wages and carbon emissions, which, while generally limited in scope, have been designed to either jumpstart more action or pressure Congress to act.
(Reporting by Sarah N. Lynch, Steve Holland and Douwe Miedema; Editing by Lisa Von Ahn and David Gregorio)