On October 1, there was a major shift in the way debit and credit card fraud is handled. If you didn’t notice the change, you’re not alone. Read on to discover how this shift could affect you.
Have you recently received a new debit or credit card in the mail? If so, it is likely enabled with new EMV chip technology. EMV, which stands for Europay, MasterCard and Visa, has become the standard across the globe for debit and credit card transactions. The United States is one of the last countries to adopt the EMV technology. The EMV cards, or chip cards, include a chip which reduces the risk of fraud. With the chip, each transaction has a unique code assigned to it, unlike the magnetic stripe that contains unchanged data that can easily be replicated. If someone were to steal the information from a magnetic stripe, the data could be replicated over and over again. If a fraudster stole chip card information, duplicating the transaction would never work because the unique code can only be used once. Essentially, the adoption of chips cards is an effort to reduce the significant amount of fraud seen in the United States.
If you haven’t yet received a chip card, don’t worry. If your card provider is opting to switch over to the EMV compatible system, you will automatically receive a new debit or credit card in the mail. It is the card provider’s responsibility to make the choice if their customers are going to have EMV compatible cards, which many already have or plan to do.
As of October 1, 2015, the way that fraud is handled with these new chip/EMV-compliant cards shifted significantly. Before October 1, if a fraudulent transaction using a chip card occurs on a magnetic stripe terminal (an establishment that had not yet switched over to EMV technology), the card issuer would be liable for the costs. Now, that liability has shifted to the merchant. Merchants can reduce their liability for fraud by installing the new EMV compatible payment terminals. Luckily, this shift does not directly impact consumers.
You can still use the EMV card on a traditional magnetic stripe reader. Because the EMV technology is so new and merchants are still adjusting, the chip cards that are being issued are equipped with both EMV and magnetic stripe capabilities.
Overall, consumers can expect little impact from these new cards and terminals. Consumers should be excited that steps are being made to protect them from fraud with no action or cost required at their expense. The cards are safe and a step forward in fraud protection in the United States.