By Gina Cocking
In the past few days, I have received two replacement credit cards – both with the new EMV chips. Happily, the activation process was speedy as the card company was not trying to “push” additional products on me, but rather just wanted to get the card in circulation. When I look in my wallet, I can see that I have two card issuers that will be sending me cards in the next few weeks. Why the deluge? Beginning October 1, Visa, Mastercard and Discover will shift more of the liability for charges to merchants via these EMV chip cards. Right now, if a merchant swipes a card and it is approved, the merchant is typically not liable if the transaction is fraudulent. However, starting Oct. 1, if the merchant accepts a chip card and instead swipes the magnetic stripe, the merchant will be liable. (Obviously, this could have a meaningful impact on small retail businesses and restaurants.)
Transactions can be more secure when paying with a chip instead of a magnetic stripe. When the card is placed into a chip reader, the chip sends a unique code for each transaction that can only be used once. On a magnetic stripe, the same card number is stored and used repeatedly. EMV chip cards are difficult to counterfeit, making it more likely that a chip-reading terminal will detect a fraudulent card.
Visa and MasterCard estimate that 575 million cards will include EMV chips by the end of 2015.
JPMorgan Chase produced this infographic on the EMV liability shift, how it works and who is using EMV: