Thursday marked a milestone in the effort to shift the U.S. to the use of microchip-embedded credit cards, a more secure alternative to traditional cards that require the swipe of a magnetic stripe, as reported previously by HNGN.
The major change lies with business owners, who are now financially liable for any fraudulent transactions that could happen in their shop, restaurant or establishment.
"That's the date by which if a merchant doesn't have a chip terminal, and a counterfeit card is used at that location, they may be liable for that fraud on that transaction. But we know, based on experience in other countries, it takes several years to get to critical mass. So we're seeing Oct. 1 as more of a kickoff toward increasing the momentum toward chip. People will still be able to use their magnetic stripes,'' said Stephanie Ericksen, VISA's vice president for risk products, according to USA Today.
Here are a few more things you need to know about the new credit card chip rule:
Magnetic stripes can easily be copied, and in every transaction made, the user's data is stored in the merchant's system. But with the new EMV chip - Europay, Mastercard and Visa - user information is not stored anywhere else, and the chips automatically change code with every transaction, making it nearly impossible for the card to be "skimmed," The Christian Science Monitor reports.
With the new system, transactions can take a little bit longer. Instead of simply swiping your card, you have to insert the card and wait for the entire transaction to end before you actually get your card back.
Despite the call for more secure cashless transactions, online transactions remain vulnerable to hacking and fraudulent activities. The new cards only focus on keeping safe face-to-face transactions but do not address online security problems.
Credit card fraud is a growing problem in the U.S. with about 31.8 million U.S. consumers having their card information stolen last year, according to a report published by Javelin, a company that studies customer transactions, according to ABC News.
