You’ve probably already received the new credit cards with chip technology from your bank or financial institution, and that’s because the looming deadline for the big switchover from the hack-vulnerable, old magnetic-strip system is almost upon us.
Oct. 1 is the start-date that card issuers and businesses have been prepping for — or at least most of them.
Some retailers and banks are holding off on this switch because it can be a costly one — especially for small businesses, according to The Wall Street Journal.
Those banks or businesses who choose to not make the move by the deadline will be required to take financial responsibility for any fraudulent purchases made with the outdated cards or at their business.
If a bank and business have made the switch to the chip-enabled cards or readers, the issuing bank will insure your fraudulent purchases as it currently does.
The outdated magnetic-stripe system is being replaced by the so-called EMV (Europay, MasterCard and Visa) chip technology widely used throughout Europe.
Security is the Catalyst for U.S. Chip Cards
Security is the biggest reason for finally catching up with Europe. When you pay for a purchase with your magnetic stripe card, the complete card number (the same one that is on the card) is used to complete the payment without encryption — meaning any machine that can read a magnetic stripe can pick it up.
But with chip-based cards, that transaction is strongly encrypted and also assigned a one-time code that is no longer valid after the payment is received (unless you need to make a return). This process is what makes chip card numbers much hard to hack into — by using point-of-sale (POS) skimmers or any other tactic — since the information on the chip is constantly changing.
End of ‘Swiping’
The end of magnetic-strip systems also means no more “swiping.” Instead, chip cards are inserted, or “dipped” as it is also known, into the credit card reader (see image above from NextAdvisor). While inserted, the chip and reader create the one-time transaction code, and then the consumer completes the transaction.
There are two ways you’ll complete the transaction and confirm the purchase — sign a receipt or enter a PIN. The type required for your card depends on your bank or card issuer.
With “chip-and-signature,” the process is very similar to how a magnetic stripe transaction works; the POS machine reads the card and you sign a receipt to complete the transaction.
With “chip-and-PIN,” the process is similar to paying with a debit card; the POS machine reads the card and you enter a PIN to complete the transaction.
What If I Haven’t Received a Chip Card?
If you have gotten a chip card from your bank or financial institution, make sure you activate that card and start using it, and destroy your old card.
If you have not received a chip card from your bank or financial institution, you’ll want to give them a call to inquire about this. The banks or businesses who choose to not make the switch by the Oct. 1 deadline will be required to take financial responsibility for any fraudulent purchases, so it they are highly motivated to make the switch.
Smaller banks are more likely to delay making the switch, but most larger financial institutions have already converted their cards to this secure option.
Consumers who haven’t received these new, more secure cards will want to consider getting a new credit card with the EMV technology to make sure their financial information remains secure.