In the months leading up to the October 1, 2015 “deadline” for converting to chip-enabled credit cards, consumers generally welcomed and prepared for the change as it promised more secure in-store transactions and less chance of fraudulent card copying. For business owners, however, the daunting task of conversion exuded all the charm of a tax audit. Consequently, this past season’s holiday shoppers headed to stores with their trusty new chip cards—only to find many major retailers still using the old swipe method. Why? Because for businesses, the transition is complicated at best and downright costly at worst. Business owners have to install the terminals that accept the new cards (which cost upwards of a few hundred dollars apiece), integrate the required software, train employees, and be sure that their installation complies with the most recent payment card industry security standards. Thus, while the road to credit card security may be freshly paved with shiny new chips, some retailers, and dealers remain reluctant to travel on it.
Technology overview: How did we get here?
The rest of the world has been navigating this technological route for some time, as EMV cards, named for developers Europay, MasterCard and Visa, have been the status quo in Europe for nearly a decade. Designed to protect issuers, merchants, and consumers, the technology helps reduce the risk of fraud during physical or in-store transactions by providing an additional level of authentication at the point of sale. (The additional protection, therefore, does apply to transactions made online or by phone.) The credit cards are embedded with a microchip that generates a unique, transaction-specific code when the card is inserted, or “dipped” into the terminal.
As the U.S. works to catch up with its global counterparts, it has yet to embrace one key aspect of EMV technology that is required in most other countries—that is, having the customer enter a PIN code at the point of sale to authorize the transaction. Americans are indeed accustomed to doing this for debit card purchases, as banks have long recognized that it provides another layer of security.
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Author: Digital Dealer
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