On October 1, 2015 many of the credit cards in our pocket have been enhanced and is the beginning of the end of the magnetic stripe credit card. Over the past year our credit cards have been updated with a new microchip in them. This chip is to replace the magnetic stripe on our credit cards and make our purchased transactions more secure.
Why the change?
Right now when a charge is done on your credit card and it's deemed fraudulent the credit card companies are the ones that are held accountable. This change puts the responsibility on the merchant (business) for the fraudulent charges. This shift in ownership is why many retailers will be making the transition as it will protect your business.
EMV technology, which stands for Europay, MasterCard and Visa, works differently. EMV microprocessor chips are embedded onto the front of your credit card. Traditional skimming devices won't work on these chips, and they're very difficult (and expensive) to clone.
Is this a United States only change?
Absolutely not! In fact, the microchips the United States has just started has been in use in Europe for more than a decade already.
How it works
To use the new cards rather than swiping in a terminal you push the card into a slot in the same terminal in the middle and under the keypad. The card will sit there for a few seconds and the transaction will go through. During our testing of transactions some required a signature and some without. On returns there was always a signature required (we did two return tests). Overall we didn't see this as a huge nuisance overall. We didn't like the fact we couldn't swipe during the transaction process but had to wait until the end of the transaction. Typically, we swiped our card and then put it back into our purses and wallets. We now have a small weight. For the added security I can accept this.
Slow and Disruptive
With all change this will be initially disruptive to individuals. Since 10/1/2015 we've gone around and took a look to see who has already complied with the new rules. Several national chains have while others have not. We did not find a single local (non-chain) retailer that has moved with this new standard (we only checked twenty stores).
For the most part the companies that had the technology knew the most about the change but didn't know why other than "it's a new rule we have to follow". One person was actually knowledgeable but admitted she did research on her own (way to go!).
Being that the businesses will now be held accountable for fraudulent charges there are many implications to the business. The first is a potential financial for any fraudulent charges. The second is the cost for all of this new equipment and any necessary software requirements. Then businesses need to training their employees but also educate their time over this new form of credit card processing. Businesses already have a short amount of time available to them and this is another item that they will have to make time for.
Many companies that have ordered the new chip readers due to demand may not even have the equipment available to them until December, half-way through the Christmas holiday season. This will not only be a hassle to business during the busiest of times for many but also the question of do they upgrade in the middle of this already busy and hectic time, do it immediately after or do it after the major return time.
One item that has not come up in most conversations is credit card percent charges. As the technology is slowly rolled out and accepted we can see a change where the merchant accounts will have another pricing structure. That of credit card "swipes" where rather being swiped with a magnetic stripe will be inserted cards with the new microchip technology.
What about online businesses?
With all of this technology and the huge push for businesses moving online this new microchip will serve no additional security for consumers as homes do not have chip readers to use for their purchases. We have many eCommerce clients and each one of them currently is 100% in compliance with the current standards.
Will this make me hacker safe?
Regretfully not. The hacker incidents of Target and Home Depot that recently happened are not protected from this new microchip technology.
October 1st is considered the starting point for this new technology push. It is anticipated to get greater than 90% saturation of use 4-5 years. Most of the larger businesses are expected to have the new chip technology in-place by the end of 2017. This new change although is not covering every aspect is the first step to protecting consumers and businesses. The first step in any new technology shift is always the hardest part. Each subsequent step continually gets easier for consumers.