New Credit Cards Reduce the Risk of Fraud

New Credit Cards Reduce the Risk of Fraud
Eileen St. Pierre, The Everyday Financial Planner

Almost two months ago, I noticed a weird charge on my credit card statement. My credit card information had been stolen AGAIN. How inconvenient! I was leaving on a business trip the next day. Discover sent me a new credit card with a new number and a new look. It had a chip on it. This chip is called EMV, which stands for the three companies who developed the chip technology – Europay, Mastercard, and Visa. This technology has been in use for a while in Europe.

Why the change?

According to Barclays, over half of all credit card fraud occurs in the US. Last year, 31.8 million Americans had their credit card information stolen last year – that’s three times more than in 2013, according to a report published by Javelin. Much of this theft has to do with our use of credit cards with magnetic strips. The data on these strips does not change. So thieves can replicate the card very easily. With the new EMV cards, each transaction gets a unique code so the card cannot be duplicated.

You can still use your old magnetic strip card.

Credit card terminal (POS-terminal) for paymentThe new EMV cards still have magnetic strips on them so businesses who have not upgraded their card readers can still take them. Businesses are not mandated to upgrade. However, as of October 1, retailers and small businesses who have not upgraded will now be held liable for any Visa, Discover, or Mastercard transaction that is fraudulent if an EMV card was used.

  • Prior to October 1, credit card issuers were liable for fraudulent transactions.
  • American Express will transfer liability to businesses October 2016.
  • Gas stations have until October 1, 2017 to replace their pumps to avoid liability.

You will no longer swipe your card.

Now you have to “dip” the card. You insert it into the card reader and wait for your information to be uploaded. I’ve used my new EMV card at Walmart and the grocery store a few times now. The first time I used it, the cashier had to come around and do it for me after several failed “dipping” attempts. Now I’m an old pro at it. Eventually some businesses will get the technology where you tap your card against a scanner.

EMV cards will cut down on fraud, but they are not 100% safe.

The new chip only protects your face-to-face credit transactions. Thieves can still steal your information if you shop online. Based on the EMV rollout overseas, it will take about three years to complete the transition to EMV cards in the US. If you have not received an EMV card yet, expect to get one before your current card expires.

Of course, criminals are already looking for ways to beat this technology.

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