With the recent hacking of over 40 million customer’s credit and debit card data – credit card companies are scrambling to keep this from happening again.

The recent theft instigated by cyber thieves is renewing pressure on the credit card industry to improve its defenses against fraud.

Could this have happened because of a faulty and outdated system? Perhaps a newer and updated system might have kept this major breach from happening.

Credit card companies such as Visa (V), MasterCard (MA) and American Express (AXP) could do more, and should have done more to keep this from happening. Most cards in Europe, for example, incorporate tiny computer chips and require a PIN code to secure transactions and virtually eliminate counterfeiting.

Why is the U.S. so far behind in credit card updates?

US credit and debit cards rely on easy-to-copy magnetic strips on the back of the cards, which stores account information.

“We are using 20th century cards against 21st century hackers,” says Mallory Duncan, general counsel at the National Retail Federation. “The thieves have moved on but the cards have not.”

U.S. merchants and banks have been unwilling to initiate the chip and pin system that uses computer chips instead of the magnetic strips. Experts say it is due to the major cost of new chip and pin cards, and the approximate 10 million new terminals needed to process them.

Because of this – “The US is the top victim location for card counterfeit attacks like this,” says Jason Oxman, chief executive of the Electronic Transactions Association.

Whether an updated credit card system could have eliminated the fraud that Target customers experienced, as well as Target themselves, is uncertain, but the chip system would have lessened the blow and the reuse value of the information stolen.

And the new universal chip and pin system is much better at detecting counterfeit credit cards.

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