The United States is switching to chip cards in October 2015. The new standard is call EMV and is the global standard for inter-operation of integrated circuit cards. The goal is for all credit cards to have embedded microchips. EMV stands for “Europay, Mastercard and Visa”. Credit cards will be equipped with a super small computer chip that’s extremely hard to counterfeit. If you’ve gotten a card recently, chances are it’s got this technology.
Why the changeover? Here’s a crazy statistic: Almost half of the world’s credit card fraud now happens in the United States, even though only a quarter of all credit card transactions happen here. The banks want to rein this in ASAP by moving away from magnetic stripe cards, which are much easier to counterfeit. The recent Target and Neiman Marcus security breaches also added motivation.
Vendors (like me) will need a new processing device to read the information in the chip cards. Come October 2015, businesses that don’t have an EMV processing device could be on the hook for fraudulent chip card transactions. Right now if a business runs a fraudulent card, banks absorb the costs. Starting in October 2015, if someone pays with a fraudulent chip card, and the business does not have an EMV card carder, the banks will no longer be liable.
Most of the world, including Europe, has been using chip cards for years. The United States is actually the last major market still using magnetic stripe only cards.
To process the chip cards a new term has arisen, called the “chip and dip”. Chip cards are inserted, or “dipped,” into the payment device and left in place for the entire transaction as the reader and card talk back and forth. That’s when the magic happens!
This won’t happen overnight, the nationwide transition to EMV technology will take some time. Based on chip card rollouts in other countries, it is estimated it will take roughly three to five years for mass adoption.
Does anyone have a chip card yet? Let me know!