The EMV Card Countdown
So why is the EMV card transition just now happening?
The EMV (Europay, MasterCard and Visa) card has been a hot topic lately with the more secure microchip replacing the traditional magnetic strip on credit cards.
But haven’t other countries already been EMV? Did the U.S. miss that memo?
According to EMVCo, as of December 2013, 80 other countries had already adopted the EMV card with 2.37 billion chip cards in circulation at that time. Fast forward to today and the U.S. is just now showing up to the party?
With the added security benefit and the ability to use your chip credit card while traveling abroad, why is this just now happening?
The answer is simple: money. The U.S. credit card industry is very complex with issuers needing to change their technology (the card) and millions of retailers that will have to change their point of sale technology (the terminal). This means the transition will take money, time, and more money (yes, that much money). According to CNBC, each new terminal will cost the retailer around $1,000 depending on how many they are purchasing. And then the cards themselves will cost anywhere from $1.25 to $2.50 whereas the traditional “swipe” cards only cost $0.25 (Forbes). This means that the transition to new cards is going to hurt a few pocket books.
But other countries already have EMV!?
Some of the other countries that have already transitioned to the EMV cards also had more to gain. While the telecommunications system is alive and well in the U.S., some countries are not as fortunate and needed to find an alternative to using an online system. The EMV card terminal provides this option, gleaning the data straight from the chip without having to automatically connect to issuers or payment processors. Some of these countries also were larger targets for data breaches, giving them the extra push needed to make the costly move.
But didn't we have an EMV October deadline?
While some issuers had already started the transition, the rest got a little nudge in October 2015. Major U.S. credit issuers (think Visa, MasterCard, and the like) “shifted the liability” to those who are the least “EMV-compliant.” Previously the issuing bank or payment processor was typically held financially responsible for any transactions that occur with stolen credit card information. However, after this new deadline, the cost will actually fall on whoever isn’t upping their security detail.
Hmmm… What does the EMV liability shift mean to me?
Let’s say your bank issues you a chip card, and you use it at your local coffee shop (who doesn’t have EMV terminals) and your information gets stolen during this transaction. This new “liability shift” means that the coffee shop is responsible for anything that thief decides to buy using your card info. (Cue the lines to jump on this ship before it sails!) However, we still have yet to see most retailers change over to the new technology.
Now that you know why the U.S. has been a little late to the dance, learn how you’ll use the chip credit card!
Lincoln Savings Bank, Member FDIC.
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