For us that use credit cards to pay for EVERYTHING, get ready for a big change on how you transaction are made. What’s exactly going to change? Swipe-and-sign credit card transactions are going to go away.
The Wall Street Journal reported that starting October 2015, all credit cards will require a PIN number. This means that all credit cards will come with a chip and PIN. Essentially the US is finally catching up to what is the standard across much of Europe and many other parts of the world.
Most of us can agree that the US is far behind with our swipe-and-sign transaction and maybe you have even had a difficult time trying to make purchases in Europe without a chip and PIN credit card. The move by card issuers seems to be an effort to tackle fraud stemming from swipe-and-sign credit card transactions.
Next fall, you can expect all transactions to be completed by entering your card into a slot and entering a PIN number.
This move to switch over to PIN and microchip credit cards is prevent hacks similar to the big security breached at Target and Neiman Marcus from happening again. They claim that credit cards with a microchip containing security date will make similar types of hacks much more difficult.
It may have took the big security breached at Target and Neiman Marcus to tip things over the edge, but Visa and MasterCard say they have had this change in the works planned from 2012.
But it would be hard to believe that after the immense attention credit card companies received from this last security breach they are stepping up efforts to eliminate similar kind of hacks in the future. They claim that credit cards with a microchip containing security date will make similar types of hacks much more difficult.
Both Visa and MasterCard have outlined that they will have a full changeover to the new chip and PIN cards by October, 2015.
We’ve already started to see this shift with banks issuing many cards with a chip, including the Sapphire Preferred, Marriott Premier Rewards, and Citi’s ThankYou Premier credit card to name a few. The thing is these are mostly chip and signature cards, so you still cannot use them in Europe when you need to make a chip and pin transaction.
Anyone who frequently travels overseas is well aware that banks will issue some cards with the chip if you ask. After one headache trying to make a transaction in Europe will make you carry a credit card with a chip on your next trip. I actually find it nice that in Europe (or Canada) the server at a restaurant comes to your table with a handheld device—your credit card never leaves your site.
I’m completely for this switch. It’s about time the US gets on board with chip and PIN credit cards. As seeing it has been super successful in reducing credit card fraud around the world in countries that have adopted the system, there seem to be few drawbacks for consumers. Under this new change US consumers will still be protected by the Truth in Lending Act which limits liability over $50 for fraudulent charges made to their card.
However, merchants could feel different. There’s a potential liability shift from banks to merchants if they do not make transactions using the chip and PIN. After the switch, if a merchant is still using the old system and running swipe-and-sign transactions they could be liable for any fraudulent transactions if the customer has a chip card. Similarly, if the merchant has the new system to run chip and PIN transactions but the bank has not issued a chip and PIN card, the bank would be liable.
What’s your take on this? How many of your cards have EMV chips?
✈ If you enjoyed reading this you can sign-up to receive blog posts via email (max of 1 email per day) or like us on Facebook! And as always feel free to ask questions in the comments below or email me.