American’s Finally Getting Credit Cards with Chips. Have You Gotten Yours?

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June 25, 2015 by Lisa Brammer

Do you know why almost half of all credit card fraud takes place in the United States even though our country only makes up about 25 percent of credit card transactions? It’s because most of us are still using credit cards with 50-year-old technology—magnetic strips.

Good news! Credit and debit cards in the U.S are finally getting more secure because the old magnetic strip technology is being replaced with “chip” or “EMV” (Europay, MasterCard and Visa) technology.

The new chip cards are different from magnetic strip cards in a few ways:
• The microchip built into the credit card contains the same information that’s stored in the old magnetic strip, but duplicating the cards is nearly impossible with this new technology.
• The chip also produces a single-use code to validate each transaction which adds another layer of security, protecting your card from unauthorized use. Even if someone obtains the code, it cannot be used again.
• The new chip cards are inserted—dipped—into terminals rather than swiped (like the ATM machine at your bank) and left in the terminal until the transaction is complete. (I’m hoping I don’t walk away without retrieving my card!)

The thing is, while banks are issuing more and more of the new chip cards, I’ve read that almost 81 percent of business owners who accept card payments have not upgraded to the new terminal. If that’s the case, don’t worry, all chip cards come with a magnetic strip that can be used if chip terminals aren’t available. However, swipe if it’s your only option—your transaction will be way more secure when the chip card is dipped.

If you are a business that has not yet invested in the new upgraded terminal, please know that on October 1st, 2015 there is going to be a liability shift. This change could shift the liability for the cost incurred from counterfeit card fraud from the issuer to the business—the liability will shift to whichever party is least EMV-compliant. If you have a chip-enabled terminal, you will not be impacted by the liability shift since you will be EMV-compliant.

Truth be told, these chip cards really aren’t very new. If you are a world traveler, you already know they have been utilized in Europe and other countries for about 10 years now. But if you think having the new chip card will make your next European vacation hassle-free, think again. Most of chip cards here in the U.S are “chip and sign” which means you will still have to sign for your purchases. Most chip cards in Europe are “chip and PIN” like a debit card. Even though most establishments in Europe will be happy with your chip card, it will not be accepted for purchasing train tickets, renting bikes, or obtaining parking permits at unmanned kiosks that only accept “chip and PIN” cards. But don’t despair, eventually the U.S will convert to the “chip and Pin”, then you’ll be able to insert your card and enter a four-digit password to approve the transaction. But for now, it’s one step at a time.

Founded in 1950, United Credit Service, Inc. is a full service, licensed revenue cycle management and debt collection agency in Wisconsin providing effective, customized one on one management and recovery solutions for our business partners. Visit our website at http://www.unitedcreditservice.com, call 877-723-2902 or check out our YouTube video.

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