The time has finally come for the United States to catch up with the rest of the world in terms of credit card technology.
On October 1, 2015 the new EMV (Europay, MasterCard, and Visa) law went into effect. In short, the law states that whoever has the lesser technology – retailer or bank – will now be responsible for fraud.
This is a big change. We have all come very accustomed to our credit card system and simply swiping our cards wherever we go, so with this change comes a lot of questions. Here are a few of the most commonly asked questions about EMV for your own knowledge or for you to share with your employees, family and friends.
What makes EMV more secure than traditional credit cards?
If you have not gotten your card in the mail yet, EMV cards have a computer chip in them versus a magnetic strip. The magnetic strips on traditional credit cards store unchanging data, so it is an easy target for counterfeiters. The computer chip in an EMV card creates a unique code at every transaction; thus if a hacker stole the information at one point of sale, it could not be used again for another transaction.
How do you pay with an EMV card?
Instead of swiping your card, you are going to insert it into a slot for the machine to read. This process is not as fast as a magnetic strip; you need to leave the card in the machine until it prompts you to take it out. This change is going to require some getting used to and patience. As a society that is always in a hurry, it can feel a bit painful to stand behind someone using an EMV card for the first time. Prepare yourself for lines to move a little slower.
What if a retailer does not have an EMV reader?
Despite the years of preparation for this law to go into place, it is estimated that only 27% of merchants will be EMV-ready by October and 44% by the end of the year, so you will run into plenty of retailers without an EMV reader. For this reason, the first batch of EMV cards come with a magnetic strip on them, too. If you try to use the magnetic strip on a machine that is EMV-enabled it will prompt you to use EMV.
Who is responsible for fraud?
While EMV cards are expected to reduce the amount of fraud, they are not fraud-proof. As of October 1, 2015, retailers are responsible for fraud if they do not accept EMV. If they do, the bank is liable.
The exception to this rule is automated gas pumps. Gas pumps have until 2017 to prepare for EMV; until then they follow the traditional rules of liability.
Will EMV protect me online?
Unfortunately, the improved security that EMV provides only applies to in-store purchases, not online. Because of this, experts are predicting we are going to witness an increase in online fraud. This is all the more reason to be safe and cautious online.
Why are EMV cards sometimes referred to as chips and pin cards?
EMV and chip and pin cards are essentially the same thing; they are both cards with a computer chip in them. The reason they are called chip and pin cards is because in addition to the security the chip provides, you can also choose to use pin code instead of a signature to add extra layer of security.
That being said, a majority of banks are not sending out cards that are offer a pin option. One step at a time.
With an estimated 1.2 billion cards to replace and 12 million machines to be upgraded, the transition to EMV and then pin-enabled EMV cards is going to be a slow process. It will take years for everyone to catch up, but with the U.S. seeing more credit card fraud than the rest of the world combined, this is long overdue upgrade that will be worth the investment.