However, the world’s largest retail trade group (the National Retail Federation) warns that the cards will not actually be any safer.
Proponents of the chip-enabled cards argue that compared to cards with magnetic stripe, the former are more secure since they generate a unique code after being used in a transaction.
Mobius Payments CEO, Mia Hyun explained, “What it comes down to is this, if the card contains a chip, but the credit card terminal doesn’t have a chip reader, or is not programmed to utilize the chip reader, the merchant can be liable for counterfeit as well as lost or stolen card activities”.
“It makes no sense to put in the state-of-the-art technology with 1980s cards to go along with it”, he said, referring to cards that require signatures only. But in the near term, lines may swell a little because of the confusion about how the cards work, he added.
While not all merchants are accepting chip cards yet, I had heard from a coworker that Duane Reade had already made the shift, so I headed to the drugstore with my Discover card in tow. “Merchants and consumers continue to be protected with zero liability for this type of fraud, ” she says.
But the government won’t come running after the business owners who didn’t make the switch, nor will the merchants be fined.
On October 1, 2015, a “liability shift” for American businesses is occurring that moves the responsibility for covering losses to the business where a fraudulent charge occurs. “And we know whatever system we have has to be compatible with that”, he said. “There are no fines associated with this date”. That’s why we are pushing the banks to use all of the security the new cards are capable of providing, not just half. “Cards whose chips are not working - those transactions will fall back to the magnetic stripe”.
“I have heard no discussion of a timeline to phase out mag stripes”, Lindeen said.
Over the last six to twelve months, stores have been gradually upgrading their systems to accommodate for the new chip cards.
EMV is a series of specifications defining a more secure method of card payment developed jointly by Europay, MasterCard and Visa in the mid-1990s. The weakness with this technology is that cards can be easily copied by thieves, leaving people vulnerable to fraud. But there is a good chance that you don’t have one in your wallet right now.
“Chip-and-signature [cards] would not have solved the Target breach”, he said.
The committee held a hearing in order to see the impact those new chip cards have on small businesses. “We recognize that that is going to be the case”, Johnson said.
“Ultimately, it’s the merchant’s responsibility to become compliant”, Mr. Mearkle said. The Gramm-Leach-Bliley Act requires credit unions and other financial institutions to meet certain criteria for safekeeping consumers’ personal information.
Mr. Garcia warned that the EMV technology won’t completely stop fraudulent activity. It says EMV cards can be counterfeited using stolen card data obtained from the black market.
