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New law mandating credit cards with chips


Chip-enabled credit cards will now become the standard for consumers and business owners. Banks and credit companies have been sending consumers new cards, which look like their old cards but are fitted with a small metallic high-tech chip known as EMV, which stands for Europay, MasterCard, Visa -- the three companies that created the standard.

Starting today, retailers and small businesses who have not yet upgraded their credit card networks will be liable for any Visa, Discover or Mastercard credit card transaction that is fraudulent if the card is EMV-equipped.

That's a computer chip, and...

If fraud occurs when a magnetic stripe card is swiped at a chip-enabled terminal, the bank is still responsible for the fraud. American Express will transfer liability to business owners on Oct. Credit card fraud is a growing problem in the U. According to a report from Barclays earlier this year, almost half of the world's credit card fraud occurs in the U. According to the Electronic Transactions Association, the high-tech chip creates a unique code for each transaction, making it difficult for criminals to duplicate consumers' information.

The new cards have to be inserted and then held in a card reader, which then uploads the information to complete the transaction. The new credit card standards are not a mandate for retailers and credit cards with just magnetic strips will still be accepted.

Here's what consumers and business owners should know about the shift: Sean McQuay, a credit card expert at personal finance site NerdWallet, said fraudsters are going to bug every non-EMV payment terminal they can to steal credit card information because these terminals will become the path of least resistance for theft.

EMV is a payment method...

Sincewhen the U. Due to these limitations, McQuay predicts that credit card fraud will continue to rise in the short term. EMV chips will prevent a thief from making a copy of your credit card but it won't stop them from stealing your online payment credentials.

EMV technology won't protect consumers with online purchases, as it only protects consumers when they dip their card in an EMV-ready terminal in a face-to-face transaction, McQuay notes. NerdWallet found that online fraud in the U. In addition, "Consumers still need to ensure that they're shopping on reputable sites, even if their card has an EMV chip on it," McQuay said. The EMV liability shift means that any businesses that have not upgraded to EMV payment terminals after today will be liable for fraud that occurs on an EMV-ready credit card.

Gas "New law mandating credit cards with chips" have until to replace readers at pumps. The cost of upgrading card readers among retailers varies greatly between each retailer, according to a spokeswoman for the National Retail Federation.

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