Remember that October 1st retailer deadline to provide chip-friendly credit and debit card payment terminals? Turns out it was a softie, as industry analysts estimate that only around 50% of US retailers have made the transition which is a major step for financial services providers and retailers to address the rising tide of credit card data breaches.
EMV Card Transition Concerns
Cost, obviously, has been a stumbling point for many retailers. So, too, is the overlap with the start of the holiday shopping season, a time of long lines, impatience and what card payment industry commentators describe as a keen potential for confusion, panic and even “chaos.” True, a new method of payment will disrupt consumer routines and expectations at the point of purchase, routines that are firmly embedded in the mag-stripe swipe system that is part and parcel of the American consumer world, but banks and credit card providers have taken the necessary steps to ensure that EMV (Europay, MasterCard and Visa) chip cards and their accompanying terminals, once they become commonplace, do not cause massive disruption. GoChipCard.com, a multi-pronged industry initiative, provides a plethora of transition support tools and answers questions for consumers, merchants and card issuers about how this new system will work.
EMV Technology Around the World
Computer chip credit card technology is far from new. For at least fifteen years, consumers have been accustomed to “dipping,” or inserting their cards, rather than swiping them, in about 80 countries worldwide. Canadian and European shoppers are used to the system. Although it took Canada eight years to reach the 90% conversion mark. Transitions take time, and major US retailers have slowly but surely been updating their card terminals to accommodate both traditional swipe and chip technologies. In the US, our delay was due in part to a back and forth tug-of-war between retailers and card issuers, who did not want to fund issuing of costly chip cards until the terminals were in place to actually use them.
Why the Transition to EMV?
EMV chip cards drastically reduce the threat of card fraud, the liability for which has shifted to retailers after the October deadline. Banks, however, will still be accountable if it can be demonstrated that the retailer had already provided the new “chip on chip” technology. Consumers have never been accountable for fraud on their own cards, a policy that has been vigorously reiterated by card issuers and banks. Retailers, therefore, are incentivized to update their payment hardware to reduce the potential for fraud, which is all but eliminated with a well-guarded chip and PIN, the standard means of verifying consumer identity at the pay point. A continuing debate rages between whether inputting a four-digit PIN or providing a signature is the optimal method of ensuring final secure identification, but both are far more secure than antiquated magnetic stripe technology. The trade-off for this added security is a multi-second delay before an EMV chip card can be retracted from the terminal. This represents the time required for the chip to communicate directly with the payment network to verify the transaction. What may be required of card users will be the readiness to supply a PIN—and the patience to wait for the card terminal’s prompting to remove the card.
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