October 1 came and went, and the world did not spin off its axis. What am I talking about? The EMV liability shift, of course. Huh? October 1 was the day the fine folks at the card companies declared that the USA would finally move to the Europay, MasterCard, and Visa (EMV) standard for credit card payments and incentivized merchants by transferring the liability for fraudulent transactions to the merchants, not the banks. What does that mean? Basically, as of October 1, if a customer presents an EMV capable card for payment, and the merchant swipes the card because they don’t have EMV equipment, the merchant is responsible for covering the charges if they turn out to be fraudulent.
What is EMV?
The behind the scenes technical aspects are too complicated for my simple mind, but the basics are that rather than swipe your card, you will now insert your chip enabled card into a reader and leave it there while the transaction processes. The chip generates a one-time code and through EMV magic, your transaction is approved.
I’ve been carrying chip cards for a few years. While many BA readers travel far more frequently than I do, my once a year or so trips overseas are enough to know that once you’re outside ‘of the USA, you are manufacturing problems for yourself if you try to get by on a mag-stripe card alone.
Where Can I Use My Chip Card?
Retail juggernaut Wal-Mart made the transition to EMV a while ago, and Target followed a few weeks ago. Home Depot made the transition early as well. There are a smattering of other retailers that have either made the move or will soon, but we are likely a few years away from widespread EMV acceptance, even with the liability shift for fraudulent transactions now being placed on merchants. Why? Procuring the equipment necessary to process EMV transactions is no small deal and it is not free. You’ll likely see bigger businesses go first, and the smaller shops following over time as more customers obtain chip cards and get used to using them. That said, both my local veterinarian and my dry cleaner are accepting chip cards now.
Where’s My PIN?
While the majority of countries you may be familiar with use Chip and PIN verification (you enter a 4-digit PIN to “sign” for your transaction), the majority of banks in the USA will be issuing Chip and Signature cards and you’ll continue to sign receipts like you always have. While I would personally prefer Chip and PIN, banks say they’ve found through their consumer research that customers would struggle to remember their PINs. I’ll leave that for others to decide. I would prefer PIN, not only because it is more secure than a signature that will be ignored, but because…frankly….I’m pretty good at remembering numbers. Ideally, I wish banks would offer a choice, but I admittedly do not know the technical challenges of doing so.
The Bottom Line
Chip cards have finally arrived in the USA, the last major market to make the conversion. Those of us who have traveled outside the country will be familiar with them, and probably shouting that “it’s about time!” For others, there will be a learning curve, but we will all get there together. It will be interesting to watch the EMV transition in the USA, and to see how that along with emerging contactless pay options like Apple Pay evolve over time.