EMV Credit Cards to Become Standard by October 2015

Chip Credit CardThe days of swiping your credit card and signing a receipt to complete a transaction are numbered. Starting late next year, it should become standard to insert your credit card into a card reader and enter a PIN.

With the recent rash of high-profile credit card data breaches at retailers such as Target and Neiman Marcus, public demand for increased security has been on the rise. While the US still primarily uses magnetic stripe “sign and swipe” credit cards, so-called EMV credit cards that contain a chip and require a PIN, are much more secure and are the norm in other parts of the world, particularly Europe.

Both Visa and Mastercard have set a deadline of October 2015 for the transition to EMV credit cards to take place. As described in this interview from the WSJ, that is the date that Visa and MasterCard have set for the “liability shift.”

According to Carolyn Balfany, group head of U.S. Product Delivery for MasterCard, “Whenever card fraud happens, we need to determine who is liable for the costs. When the liability shift happens, what will change is that if there is an incidence of card fraud, whichever party has the lesser technology will bear the liability. So if a merchant is still using the old system, they can still run a transaction with a swipe and a signature. But they will be liable for any fraudulent transactions if the customer has a chip card. And the same goes the other way – if the merchant has a new terminal, but the bank hasn’t issued a chip and PIN card to the customer, the bank would be liable.”

In short, both merchants and issuers will be highly incentivized to make sure that their systems have been upgraded by that date. It should be noted, however, that many merchants will still likely not have the systems in place to support EMV by the October 2015 deadline due to either cost or logistics. In addition, while Visa and MasterCard have recently reaffirmed the October 2015 date, there has been pressure from merchants to push the date back.

Despite all this, momentum behind the EMV movement has been building, and if you don’t have one already, there’s a good chance that your current credit card issuer will be sending you a new EMV card in the mail within the next year or so.

Related post: For a bit of background on EMV credit cards in general and a list of credit cards that currently employ chip and PIN technology, see this post.

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