If you’ve gotten a new credit card recently, you may have noticed it has a tiny microchip embedded in it. This is an EMV chip, and you’ll likely see one in each of your cards soon. But don’t worry, this is a positive change: EMV chips make your point-of-sale transactions more secure and allow you to pay for goods and services at chip-only terminals.
Europay, MasterCard and Visa developed these chips to make transactions more secure. Instead of processing limited data like a magstripe card, EMV technology allows dozens of pieces of non-static information to be transferred between the card, the terminal and the financial institution that processes credit card transactions for the merchant.
Chip technology predominantly eliminates the risk of credit card skimming, a common practice for thieves committing credit card fraud. Fraudsters use a card-reading device to skim credit card information from a traditional magstripe card and load it onto a prepaid card. However, with an EMV chip, the card’s many pieces of data change for each transaction. Therefore, any skimmed information would be useless for the thief.
If your credit card isn’t chipped yet, it likely will be soon. In October 2015, a policy change called the “liability shift” will occur, placing the blame for fraudulent transactions on the issuer that doesn’t issue chipped cards and merchants that don’t accept them.
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As it stands now, issuers alone are typically liable for credit card fraud, but now the blame will go to whichever party isn’t EMV capable, or it will be shared if both parties neglected to update. So while neither issuers nor merchants are being forced to upgrade to EMV technology, they have a strong financial incentive to do so.
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