On Thursday, shoppers will be inserting their new credit and debit cards into a card reader, chip side first, instead of swiping them as has been done for years.
For a while now, consumers have been receiving their new cards, and on October 1, many retailers will begin accepting them. The fraud-prevention chips embedded in the cards are designed to prevent counterfeiting, just as the Europay cards have cut fraud throughout Europe, says the LA Times.
U.S. last major country to switch to computer chip technology
The United Kingdom was the first country to switch to the new payment method, known as the EMV Standard. Developed by Europay, Mastercard and Visa, the system requires the cards to be outfitted with a tiny computer chip that transmits a unique code with each transaction.
Since 2013, hackers and fraudsters have turned their attention to the U.S. because it was the one big country to not have the new EMV system in place. Major data breaches took place, with Target in 2013, and Home Depot in 2014.While credit card fraud will be more difficult, the new technology will not eliminate data breaches.
This is because the chips are a security measure for credit and debit cards, and not for database systems says Allison Edwards, director of product delivery for the card services division at financial services technology firm Fiserv. “Even if fraudsters gain access to some of the data, they can’t counterfeit cards,” Edwards says.
October 1 deadline shifts liability to retailers
Retailers were given plenty of time to upgrade or change their credit card readers in time for the Thursday deadline. After this date, credit card companies will not cover any fraudulent charges made at companies that do not upgrade their machines. The liability shifts to the retailer at this point.
So what does a consumer do if they don’t have a new card yet? You can still use your swipe-method card, and if someone makes fraudulent charges on your card, you are still covered because the charges will be paid by the credit card company or the retailer, depending if the retailer had the new EMV system installed.
As for gas stations, it will be an expensive process to make upgrades to the card reading systems on every single gas pump in the U.S., so gas stations have until October 1, 2017, to complete their upgrades.
Watch out for an increase in online fraud
One of the unintended side-effects of EMV credit and debit cards has been the increase seen in online fraud. Consumers buying or paying bills online will have to be extra careful of getting hacked by a criminal. This is because web technology hasn’t come up with this type of chip technology.
“The data shows that fraud will migrate online at alarming rates as criminals and cyber thieves shift their approach to exploit the weakest target,” a spokesperson for e-commerce security provider Trustev wrote in an email.
Trustev cited the 100 percent increase in online fraud in both Canada and Australia after those countries went to EMV technology. The UK saw an increase of 89 percent in online fraud after implementing the EMV method. The spokesperson wrote that they were estimating an increase of 106 percent in online fraud in the U.S. in the coming years.
