Your old credit/debit card is getting a new look. The old magnetic strip on the back of your traditional credit or debit card is being replaced by new card technology that uses a computer chip on the front of the card. The change, instituted by the banking and card processing industries, is designed to make it more difficult for thieves to perpetrate fraudulent transactions by copying the magnetic strip on the back of your card. The American Bankers Association estimates that in 2012 there were nearly $2 billion in fraudulent transactions.
The change over by any standard is going to be a massive project. Approximately 50% of U.S. credit and debit cards are expected to be replaced by year end. The U. S. incidentally has half of the world’s fraudulent activity while engaging in 25% of the global activity according to a report from Barclays.
“We are thrilled to see the chip technology finally getting implemented by U.S. merchants and banks. This change is not foolproof, but at least it levels the playing field when it comes to which countries are the easiest targets for the identity thieves.” ~Don Murray, President and Chief Executive Officer of Commerce Bank of Temecula Valley.
Merchant stores have an October deadline to be compliant with the directive requiring new equipment to read the new cards. The merchants can be on the hook for the cost of the fraud if they are slow to upgrade.
The new technology assigns a unique code for every transaction made on your card. A thief acquiring that code couldn’t use it to make another purchase. The chip cards also come with a magnetic strip that can be used without the new reader to retain the versatility of the old card; it just won’t be as safe.
Instead of swiping your card at checkout, the new reader will resemble an ATM machine that will stay in the slot until the reader prompts you to remove it. You will still be required (for now) to sign when you pay for something. Eventually, the U.S. will utilize a “chip and PIN” technology where a 4-digit password will be required to approve the transaction – similar to the technology utilized in Europe and other global destinations currently.
