Making the Transition to Credit Cards With Microchips

This change is meant to reduce credit card fraud, but a new study by NerdWallet concludes that the opposite is likely to occur, at least at first.

“Over the next five years, “[card-not-present fraud] will continue to grow as EMV becomes ubiquitous worldwide, leaving online sellers the primary focus of experienced, sophisticated criminals”, writes Nilson Report publisher David Robertson, in a report released this month that analyzes 2014 fraud costs. But those chips cards won’t deter online fraud, because computers lack chip card readers. As Visa explains, its EMV chip cards “protect in-store payments by generating a unique, one-time code needed for the transaction to be approved”. “USA banks have kind of shied away from it because of the expense, and now because of all the fraud, they’re more motivated to try to cut their costs down”. EMVs are billed as more secure than standard credit cards for in-store swipes. “That’s why I caution consumers to be extremely wary any time they need to swipe a card after this fall”, McQuay said.

But as good as the technology is, EMV won’t solve all of our card security problems.

In October, responsibility for credit card fraud switches from issuers only to the party – issuer or merchant – that doesn’t use EMV technology, a change known as the “liability shift”. And while this shift gives both parties a lot of incentive to adopt the technology, EMV compliance is not required. Also, processors are in need of more staff to process certifications fast enough to keep up with demand.

“EMV is a powerful tool, but it’s only effective if both consumers and merchants are ready to use it for transactions”. “If only one side has upgraded to EMV for a specific transaction, then the upgrade was a waste”.

In the United Kingdom, for example, counterfeit fraud rates temporarily spiked and “card-not-present” fraud has continued to increase since EMV adoption in 2005.

In 2013, about 10 percent of USA small businesses were victims of payment fraud.

Phillip Miller, Guy Berg, Jeff Stroud & Steven Paese, EMV for U.S. Acquirers: Seven Guiding Principles for EMV Readiness, MASTERCARD ADVISORS (July 2012). EMV relies on a secure chip memory and an intelligent processor to enable different card authentication and cardholder verification methods.

Some have already gotten our new chip cards in the mail. Leave it there and follow the terminal’s prompts. The screen will alert the merchant and the card holder when the card can be removed.

Some influential EMV supporters have created a sense of panic surrounding the adoption of EMV, generating confusion among merchants by suggesting that EMV would have protected merchants like Home Depot and Target from large-scale data breaches. It appears few, if any, are griping about it, though it’s unclear how acquainted Mississippi’s businesses actually are with the EMV card and obligations it places on them.

If you haven’t received a chip card, your issuer may provide one on request, says Randy Vanderhoof, director of the EMV Migration Forum.

To lower your chances of online fraud, avoid shopping on unfamiliar or unsecure websites.

As the summer begins to wane many of us in the payments industry have nary a tan line in site and our golf games have suffered greatly.

“As more countries in Europe have implemented this technology, more of the scam artists have moved over to the USA because we still use the magnetic strip”, said Mills.