26
Oct

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With all the buzz about the new EMV chip credit cards and debit cards, I’ve been on the lookout for my new cards from all my banks since last fall.

But, when I received them and started to use them everywhere, I found that hardly anything changed at the ATMs and at the point of payment in most stores and retailers I frequent.

In fact, according to a Visa earnings transcript released in January 2016, only 17% of U.S. retailers were enabled with payment terminals for handling chip-based transactions with the new EMV cards as of January 2016.

So, most likely you have simply continued to swipe your new chip card and enter your pin the old way instead of dipping your chip card in the reader at most merchants, stores, gas stations and even ATM machines, just like I have.

I did notice that Chase has updated the ATM machine I use and now holds my card, using the chip technology, to record and complete my transaction. My local Home Depot also has the new chip readers installed and activated.

But Regions Bank and my local credit union, which sent out my new chip cards recently, has yet to update their ATM terminals at my branch and still reads and records my card information the old way, even though the cards are chip-enabled. Many other retailers I frequent have the new chip reader terminals but they are not activated and instead use the traditional swipe and PIN method of payment.

How counter-productive is that?

It’s frustrating because, as of October 2015, MasterCard and Visa instituted a ruling about fraud liability that states that whichever party (merchant or issuer) hasn’t upgraded to chip-enabled technology will be held responsible for any fraud costs. For this reason most of the issuers have sent out new chip-enabled cards, but many retailers and bank ATMs are lagging behind because of the cost and time investment necessary to upgrade their payment terminals and systems.

What’s different about the new chip and cards

Whether you have or you haven’t received new cards yet from all of your banks and card issuers you might be wondering what the big deal is all about.

The new EMV card (short for Europay, MasterCard and Visa, the three financial developers behind this new card push in the U.S.), eliminates the magnetic card strip on the back to make cards more resistant to thieves stealing the card numbers and PINs at the point of sale or at ATMs. Instead, a computer chip is embedded in the card, which holds your 16-digit account information, which is used with a signature validation here in the U.S. In Europe, chip cards are coupled with a PIN instead, which is harder to copy than just a signature. Still included on the new cards is an expiration date and a 3-digit security code.

The difference is that the chip produces original data for each transaction so it cannot be replicated like the data in the magnetic strip can because it provides the same account information the same way for every transaction. This is such a great step in the right direction to try to protect consumers from credit card fraud at the point of sale and at the ATM.

Chip tech protects against card skimming fraud when it’s used

Card skimming is when thieves use sneaky technology and even video cameras to record your account numbers and your pin-pad entry at cash registers, ATMs and gas station pumps to reuse them or sell them. Last year, nearly all ATM losses resulted from skimming crimes according to statistics from ATM Marketplace, an ATM industry trade group.

For avoiding card skimming fraud and scams, these new chip-enabled cards will help, but only where the retailer, ATM or gas station has updated their payment terminal or card machine. If you flip your new chip cards over, you’ll notice they all still contain the magnetic strip. That’s so you can still swipe your card at the point of purchase at all those retailers who have not updated their payment terminals to accept and use the chip card.

How to know if your card has chip and the retailer is using it

Your card has the new chip if you see the little silver square on the front left-hand side of the card just above the first 4 letters of the card number. You can tell when an ATM or merchant payment terminal has been updated because you will be required to insert your card all the way in the machine, which will hold it until the transaction is completed. If that’s an option, always use it with your new chip cards.

If you do not have a chip card yet (hint: PayPal), simply try to opt for the credit option to avoid entering your PIN whenever .

One way to keep on top of credit card fraud is to monitor your credit report and credit score regularly for negative changes. If you’ve been a victim of credit card fraud and it has affected your credit negatively, professional credit repair can help.


Posted in Credit, Finance