July 18th, 2014

Security Improvements Still on Hold for U.S. Credit Cards

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EMV Credit Cards

Visa, MasterCard, American Express and Discover are putting the pressure on: credit card issuers have until October 2015 to replace consumers’ credit cards with more secure EMV cards. According to a new report by the Aite Group, this means that 70 percent of credit cards in the U.S. will have EMV technology by the end of 2015.

Since EMV technology in credit cards is more secure than standard magnetic strips, this migration could curb the rise of fraud worldwide. In 2012 alone, credit, debit and prepaid card fraud resulted in $11.27 billion in losses, up 14.6 percent from 2011.

What is EMV?

EMV stands for Europay, MasterCard and Visa—the three payment processers that have joined forces to encourage more security and global usability among credit cards. EMV is the set of standards for the more secure authentication of credit card transactions worldwide.

Credit cards enabled with EMV technology contain a chip that creates a unique code for each transaction. It’s said to be more secure because stealing someone’s credit card information from an EMV-enabled card swipe is akin to using an expired password.

Eighty countries worldwide are migrating to EMV chip technology. The U.S. is one of the last of these countries to migrate, but most issuers have already announced their implementation plan in response to the October 2015 deadline.

What’s with the October 2015 deadline?

The October 2015 deadline ensures that issuers and merchants alike make the EMV migration a high priority in their business roadmaps.

After the deadline, issuers who fail to incorporate EMV technology into their cards and merchants who haven’t updated their infrastructure will be liable for fraudulent purchases. Called a fraud liability shift, this will mean that whichever party involved in the fraudulent transaction that did not update to EMV—either the issuer or merchant—will be held accountable for the fraud.

Why is the U.S. so far behind?

It’s all about the money. Manufacturing a credit card with chip technology is said to cost between four and 15 times as much as magnetic strip cards. Then there’s the cost to send those new cards out to the approximately three quarters of U.S. consumers who carry at least one credit card.* Merchants will deal with the costs of migration as well by paying to upgrade their payment systems to accept EMV card technology.

While some U.S. credit card issuers have already started the migration, Sam’s Club became the first retailer to offer a branded chip-enabled credit card with their 5-3-1 card, launched last month. Target isn’t too far behind. Following their catastrophic security breach last year, the retailer vowed to reissue their REDcard portfolio cards with EMV technology and also to update their registers to accept chip-and-pin cards in about 1,800 stores by September.

What can I do in the meantime?

As mentioned above, there are some cards in the U.S. that are already available with chip-and-signature technology. Some of the most common from our advertising partners are the Chase Sapphire Preferred card, the BankAmericard Travel Rewards credit card and the Barclaycard Arrival Plus World Elite MasterCard. Contact your card issuer to find out if your card is currently available with EMV technology.

If you have a card that uses chip-and-signature security, you don’t need to worry about whether or not it will work at stores that haven’t updated their payment systems yet. Your payment experience won’t change, but after October 2015, the merchant who hasn’t upgraded will foot the bill for any fraudulent charges.

If you travel overseas, particularly to Europe, you may need to use a card with EMV chip technology. Many European terminals require chip cards. In addition to chip-enabled cards, you’ll want to ensure you have a card with no foreign transaction fees so you’re not hit with an additional fee with each swipe.

Finally, you can connect your credit and debit card accounts to Credit Karma to monitor for unusual activity. Under the Fair Credit Billing Act, your liability for fraudulent use of your credit card is limited to $50. Keep an eye on your transactions. If you spot a suspicious purchase, contact your bank or card issuer right away.

Bottom Line

It’s going to take some time for U.S. card issuers and merchants to fully migrate to the more secure EMV card technology. Even after the October 2015 deadline, it’s estimated that 30 percent of credit cards and 59 percent of debit cards will still use magnetic strips.

New technology or not, keeping a close eye on your own finances is still a great way to catch and stop suspicious activity.

*According to recent Credit Karma data.

Editorial Note: The editorial content on this site is not provided by the bank or issuer. Opinions expressed here are author’s alone, not those of the bank or issuer, and have not been reviewed, approved or otherwise endorsed by the bank or issuer. Credit Karma may be compensated by companies mentioned through advertising, affiliate programs or otherwise. It is this compensation that enables Credit Karma to provide its members with services like free access to your credit scores and free monitoring of credit and financial accounts at no charge.

 
Disclaimer: All information posted to this site was accurate at the time of its initial publication. Efforts have been made to keep the content up to date and accurate. However, Credit Karma does not make any guarantees about the accuracy or completeness of the information provided. For complete details of any products mentioned, visit bank or issuer website.

Bethy

is the Communications Manager at Credit Karma, where she’s been since February 2011. When she’s not writing about credit and finance all over the web, you can find her playing her guitar, catching the latest movie, training for her next race or just exploring the city of San Francisco. Say “Hi” on Twitter: @bhardeman.

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4 Comments

  1. Why does your site only work for one person. My wife cannot use your service because she has to use my e-mail.
    There has to be a way of bypassing for more then one user on a e-mail caaount

    James Buchanan at 3:19 pm on July 22, 2014
  2. Mike

    Hi James – As a security measure, it is only possible to have one person’s identity associated with any given email address. If your wife would like to sign up, I’d suggest establishing a new email address with a free provider such as Gmail or Yahoo. Thanks!

    Mike at 8:48 am on July 23, 2014
  3. Why is the U.S. So far behind? Well you nailed it, it’s all about the money. The trouble is, if they had been proactive starting September 2013 they could have merely rolled out the chip and pin enabled cards as their customers cards expired.

    Instead they have chosen to be the like stubborn braying mule and dug their heels in. Surely they would be smart enough to have realized that the quicker they managed to switch over and get chip & Pin P.O.S. terminals into the stores quickly the faster customers would adopt the tech. Back in 2001 when I lived in the UK I was issued Chip & Pin cards by my bank way before there was even terminals that could use it.

    It makes me wonder how long before they actually start rolling out terminals that operate with the chip and pin system or whether it will be another 15 years before I see such terminals here in the USA!

    Don’t these Banks even grasp that the oost of switching over is cheaper than the cost of their annual losses from card fraud?

    Stewart McCall at 3:08 pm on July 29, 2014

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