Newly issued credit cards will use microchips installed on the front of cards to register payments with stores instead of the traditional magnetic strip.
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Roughly half of all global credit card fraud occurs in the USA even though the country makes up only about a quarter of all credit card transactions, according to a report by Barclays earlier this month. And if a bank fails to provide a chip card to a customer, it likely will be liable for fraud during cases in which merchants haven’t updated terminals.
While Thursday was originally targeted as the deadline to get most Americans using the new chip cards, the vast majority of transactions are still being made using the magnetic stripe. In effect, liability for transactions made with fraudulent payment cards shifts from card issuers to merchants if they do not have EMV-compliant technology.
No such thing will happen, and that appears to be somewhat OK on the surface. But many restaurants, bars, retailers and other businesses depend on more sophisticated point-of-sale (POS) systems to manage not only payments, but also critical business functions like inventory, scheduling and promotions.
Mobile commerce is having difficulty gaining traction among small businesses in the United States.
“We strongly feel our clients need to have these new cards”, she said.
“I think the smaller retailers are taking a little more time with it”, he says. Partly, thats because more security means less convenience, says Buzek. “But we do a great job of preventing fraud now and don’t feel our exposure will change”.
“Unfortunately, switching to chip-enabled cards won’t curb credit-card breaches, but what it may do is reduce the amount of credit-card numbers that can be used after the data is stolen”, said Mike Buratowski, VP of cybersecurity services at Fidelis Cybersecurity, in an email.
Developments such as biometrics, tokenization, two-factor authentication and more secure backend systems all play a role in enhancing overall data security.
“The credit card processors want the retailers to have a few skin in the game and that’s not all bad either”, Jessie Schmidt with the Better Business Bureau said. For now, numerous cards banks are sending out have both stripes and chips, because most US checkout counters havent switched over yet. In parts of Europe, 95 percent of terminals are EMV-compatible. Six out of 10 of us haven’t even received our chip-enabled cards yet. But the tradeoff may be a more orderly payment process on days like Black Friday. It wasn’t a smooth experience. Will that extra time be enough to make consumers tap and pay more with their smartphones?
The EMV transaction process does bring up the question of whether consumers are aware of the shift happening in the U.S. Card issuers and retailers are already gradually switching to the new technology.
“It certainly did cost and it’s not cheap, these new machines”, said Ben Blackwood who is the manager of The Junction in Lenoir City.
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Still, the transition will not be a smooth one. With EMV cards, they must wait to insert the card in a reader until after the cashier is done, then leave the card there for several seconds while the chip and the network communicate. Created to streamline the conversion from magnetic stripe cards to chip cards, the deadline was set by companies including MasterCard, Visa and American Express.
