The magnetic strip on the back of credit and debit cards going the way of 8-track tapes and dial-up Internet soon.
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Fiserv has been busy helping banks, credit unions and card issuers prepare for the liability shift, since it provides both chip card manufacturing and payment processing services.
The hacker tried to run transactions through their terminal and leave them with thousands of dollars in credit card fees.
“The migration of USA issuers to chip cards will ultimately help mitigate counterfeit fraud”, Freeman says.
The outdated magnetic-stripe system is being replaced by the so-called EMV (Europay, MasterCard and Visa) chip technology widely used throughout Europe.
Sixteen percent of respondents in the Northeast had requested chip-enabled cards, followed by consumers in the South (10%), West (8%) and Midwest (1%).
When you swipe a traditional magnetic stripe card, by contrast, the information is the same with each transaction.
And don’t worry if the place where you’re shopping doesn’t have an EMV-compatible terminal set up – the new cards will still have magnetic strips you can use for merchants who haven’t upgraded yet.
“The principle thing that EMV chip cards do is address counterfeit fraud, which is the majority of the fraud that happens in the United States today, and certainly over the past few years”, MasterCard product expert Carolyn Balfany tells Business Insider.
Why would you want one?
Green Bay-based Associated Bank has also been reissuing its debit and credit cards, on a gradual basis as customers’ cards expire or need replacement. “That makes it virtually impossible to create counterfeit cards to commit in-person fraud”, Vanderhoof said.
After picking out a celebratory bottle of wine for a housewarming recently, the cashier took my debit card and, rather than swiping it, inserted the small chip on the face of the card into the terminal. To start, this card gives you 40,000 bonus miles – worth $400 in travel – when you spend $3,000 on purchases in the first 90 days.
Not all issuers now offer cards with chips, but the security benefits might make it worth signing up with one that does. Dipping the card will allow the new card terminals to read the chip at the end of the card.
At Buddy’s Sports Corner in the mall, directly across from the card store, owner Buddy Kurzweil echoed the thoughts of many small retailers who have heard about the October . 1 deadline but aren’t exactly sure what it means. A year ago, there were approximately 20 million Visa chip cards.
“If you hand your card off, you’re still exposing your account number. With the introduction of chip and PIN we are bringing it into Barbados as well with the intention of changing out our ATMs [Automated Teller Machines] to accept the chip cards and also at the merchants’ point of sale terminals”, De Souza explained. Therefore, if the business chooses not to invest in chip technology, it could become legally and financially responsible for counterfeit fraud conducted in their stores.
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The National Retail Federation released a survey Wednesday showing that 63 percent of consumers believe chip and PIN cards are safer than chip and signature.
