Monday, December 7, 2015

Credit card chip technology finally makes its way to the U.S.

EMV (Europay, Mastercard, and Visa) is becoming the standard for U.S. consumers and business owners. While many other countries have already adopted this technology, the U.S. has lagged behind. These new and improved cards are equipped with a small computer chip that’s extremely hard to counterfeit. With compromised credit cards and data breaches on the rapid rise, the U.S. payment industry is slowly making the transition to EMV technology.

In 2014, data breaches totaled 1,540 worldwide -- up 46 percent from the year before -- and led to the compromise of more than one billion data records. In addition, approximately 31.8 million U.S. consumers had their credit cards compromised last year, more than three times the number affected in 2013. Although the deadline for the transition was to be complete by Oct 1, 2015, some merchants still do not have EMV card readers readily available, making them fully liable for their losses in any data breach.

So what does this mean for consumers? Well, without the upgraded machine the chip doesn’t come into play -- consumers will have to swipe the magnetic strip instead and therefore forfeit the card’s fraud fighting protection. The card will also lose its security benefits if a PIN is not attached to the chip -- card holders must assign a PIN to the card’s chip to enable full protection.

Experts hope that chip-enabled cards will significantly reduce card fraud in the U.S. However, online fraud is expected to grow because EMV technology only protects consumers when they insert their card into an EMV-ready card reader, so shoppers will still need to take extra precautions when making purchases online. For more information on how chipped credit cards function, check out the FAQs page on CreditCards.com, or attend the Rocky Mountain Information Management Association’s upcoming session, “EMV Chip and PIN: Will it save us?” on Dec. 10, 2015, in Denver.

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