If you own a credit card, most likely your bank sent you a replacement credit card during 2016 with a gold metal chip located on the front side. October 1st, 2016 marked the 1-year anniversary of the liability shift from the credit card issuer to the individual merchant regarding in-person credit card fraud.
While most stores and restaurants can still only accept credit card payments the traditional way, by swiping the magnetic strip on the back of the card, the number is increasing daily that can accept EMV chip transactions. As more merchants upgrade their payment software, more users are paying with the chip and have spoken their mind about the future of credit card payments.
The Need for EMV Chip Cards
The Europay, MasterCard, Visa (EMV) chip has been around since 1992 when France began using the new technology. Approximately 48% of all credit card fraud occurs within the United States and the primary reason is the outdated magnetic strip technology allowing an identity thief to easily steal payment information by using a “skimmer.”
EMV chips cards, on the other hand, complete a purchase with an encrypted code, making it virtually impossible for a credit card thief to steal key information required to produce a fake credit card that will be used in a future spending spree until the bank becomes suspicious.
Although the liability shift for fraudulent magnetic swipes went into effect on October 1st, 2015, ATM machines and gas stations have had their deadlines extended until October 2017. So it is still possible to have your credit card data-skimmed, even an EMV chip card, by using it at any place that doesn’t accept chip payments yet.
The two most common locations will be ATMs and gas station pumps as those readers are not constantly staffed with a cashier, allowing a thief to pretend to be a customer but actually installing a near-invisible reader that wirelessly transmits the data to a nearby computer.
What Consumers Think
Consumers have had mixed emotions towards chip cards, but the relationship is warming. While this enthusiasm helps solidify the future of chip cards in the credit card arena, many consumers and businesses also shared many concerns about the cards as well.
Chip Cards Are Too Slow
Living in an instant society, chip cards seem like a step backward in terms of increasing the efficiency of paying for a purchase. With a magnetic swipe, a credit card payment is processed in a few seconds while it takes approximately 15 seconds with a chip card.
Credit card companies and merchants are working on ways to speed up the transaction process without sacrificing security. The transaction time also increases as approximately 39% of credit card users first try to “dip the chip” only to be prompted that they must swipe the magnetic strip to complete the transaction.
Consumers Are Confused When to Pay With a Chip Card
Through August 2016, only an estimated 36% of merchants were accepting chip cards. Even though many more merchants had card readers that had a slot to read the chip or accept the magnetic swipe. Part of the delay is that individual merchants have to update their payment software and have their machines certified.
Until more merchants can accept chip card payments, consumers will remain frustrated at guessing whether the card reader accepts chips yet or the significance of the beeping noises prompting the shopper to remove the card once the transaction has been completed.
Pin or Signature Required
In-person credit card fraud can still occur with the physical theft of a chip card. While other countries require a PIN to be entered to complete a transaction, most American merchants only require a signature and possibly a billing zip code. The signature is more convenient and the established precedent for completing a credit card transaction, so a consumer might be resistant to transition to remembering a PIN number to complete each transaction.
The Future of EMV Chip Cards
Despite EMV technology being 24 years old, it will be commonplace across the globe for the foreseeable future. Credit card companies are working on ways to improve the payment experience for consumers and merchants, but, it takes time.
Chip cards will greatly reduce the current rate of credit card fraud from skimming, but, it doesn’t do anything to prevent digital fraud as more consumers are purchasing online instead of in-person. Consumers are optimistic about the future of chip cards and that optimism should continue to increase with more widespread use and technology upgrades.
Author: Jeff Gitlen
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