Today’s the day!
*leaps out of bed*
*runs to calendar*
*trips and bangs knee*
*hobbles to calendar*
*circled by hearts and smiley faces, October 1: CHIP DAY*
Oh, boy! It’s finally here. The day when credit card companies across the U.S. must start rolling out new cards embedded with microchips designed to prevent fraud, meant to replace the older, more vulnerable magnetic stripes. The deadline today also applies to most merchants (automated fuel dispensers have until 2017), who by now must start using new Point-of-Sale terminals that can read the EMV chip technology (so named for Europay, MasterCard and Visa, the three companies that created the chip card in the 1990’s).
EMV has been in use throughout Europe for the last decade, with the UK adopting it in 2006. Counterfeit fraud in Britain dropped 16% over the next decade, says CEB TowerGroup. The U.S., meanwhile, accounted for 48.2% of the world’s card fraud last year. This is not to say that chips are the be-all end-all foolproof solution. For one thing, U.S. implementation won’t be exactly like Europe’s, as the Europay system also requires a personal identification number (PIN) in addition to the chip, while U.S. banks will allow an either/or between PINs and signatures. More significantly, chips can’t affect online transactions, and the fraud risks present therein—particularly since, according to a CEB report, online credit card fraud jumped to 67% from 29% of all card fraud in Britain over the course of a decade, through 2013. Brian Riley, an executive at CEB, states a similar trend of movement towards mobile payment is underway in America, as well.
And yet, while it won’t end credit card fraud by any means, it is a strong measure to reduce it. Cost of implementation is high, and thus difficult for smaller businesses, but giant chains like Target and Home Depot have already announced their compliance. I doubt they wanted to take any chances again. Would you?
By: Jonathan Weicher