CHIPS (of the Credit Card Variety)!

2 Oct

Yesterday was an exciting day, as big changes were afoot in the world of credit cards. Did you notice? Did you care? Did you celebrate as I did by spending some money?

Yes, yesterday was the deadline for liability shift with regards to credit card technology. I have a weekly gig writing about credit cards, so it’s something I’ve been paying attention to–for years, actually–and yesterday marked another tiny step that America took in catching up to the rest of the world.

I’m talking about chip cards. Have you been getting replacement credit cards that have a little chip on them? I have–and haven’t. I have five credit cards in my wallet: a MasterCard, an American Express, a Discover card and two Visas. Because I write about cards, I believe I should have the major brands. One Visa gives me hotel rewards. The other Visa I got specifically because it has a chip. I needed it for a trip to Europe, since over there, there are places that simply don’t accept magnetic stripe cards anymore and I didn’t want to get myself into a bind. At the moment, only two of the cards in my wallet have chips on them–the two Visa cards.

I’m getting a little ahead of myself here. If you don’t know what chip cards do and why it’s such a big deal, let me give you a quick explanation. Our typical credit cards have a magnetic stripe on the back, and that stripe contains the personal information needed to make payments. It’s old technology and is relatively easy to steal.

The next version of technology is EMV, and that’s the chip on the card. The chip is actually a little microprocessor, and all of your personal data is stored on that chip. To make a payment you stick a card into a payment terminal and then you  authenticate payment with a PIN or a signature.

EMV’s a lot more secure, which is why it’s kind of crazy that the U.S. has waited so long to implement it. Oh, I get it. Change is expensive and takes time. It’s expensive for retailers to invest in the equipment. It’s expensive to make new credit cards. It can take a lot of time to install all of the equipment and make sure it works. Getting cards mailed out takes a while.

But I’ve had my original chip card for almost three years. THREE YEARS, and I haven’t been able to use the chip function in this country. Don’t even get me started on chip and PIN. When I got the card, my choices were few, and getting the PIN feature was really expensive (like a few hundred dollars that I wasn’t willing to spend). For that, whenever I travel outside the U.S., I get raised eyebrows because retailers don’t expect to have to ask people to sign for purchases anymore–you’re supposed to be able to type in your PIN and that’s it. But noooooooo, they have to print a receipt, and I have to sign it, and it takes forever. Forever. I feel like I should apologize every time.

Anyway, yesterday marked a big deadline in the U.S.’ shift to chip cards. The liability shift. That means if there’s a data breach, fault is going to be assigned to whoever isn’t up-to-date. If a retailer doesn’t take chip cards, they’re going to be on the hook for fraud. If a card doesn’t have a chip on it, then the issuer’s going to be at fault (so for me, that’s my Discover and two Citi-issued cards). Could be a big problem, particularly if you’re a small business.

I was at dinner with some friends last night and heard Target had turned on their chip terminals, so after dinner I hightailed it over there and bought some stuff. And paid with my chip card. And was so very happy (well, not about the whole chip and signature thing, but still). Target’s had the chip card readers for a long time too, and you haven’t been able to use them–everything had to be swiped. Not anymore!

I thought for sure this was the beginning of a better system……and then I went to Hannaford today for some groceries and even though they’ve got the chip readers, the chip feature wasn’t turned on yet.

It looks like it’s going to take just a little more patience. We’ll be caught up to the technological present soon, I hope. Just in time for something else to take its place.

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