Europay, Mastercard, and Visa ("EMV") payment cards, also known as Chip 'n' PIN cards, are widely recognized as being more secure than the magnetic strip cards that most of us in the U.S. use. But many say that use of magnetic strip cards in the U.S. explains why data breaches are more prevalent here than in Europe or Canada, which adopted Chip 'n' PIN cards some time ago.
Regardless, the era of magnetic strip cards is soon coming to an end. In one month, the federal government is expected to be compliant with an executive order, issued by President Obama on October 17th, directing all federal agencies to adopt Chip 'n' PIN by January 1, 2015. This big push for Chip 'n' PIN by the White House lays the predicate for the nationwide adoption of the EMV standard, which is set to occur later next year.
Specifically, on October 1, 2015, liability for the costs associated with credit card fraud shifts from U.S. card issuers to merchants, including franchisees. With this liability shift, the party that is the cause of a chip transaction not occurring (i.e., either the issuer or the merchant's acquirer processor) will be held financially liable for any resulting fraud losses. In other words, merchants who do not upgrade their payment card terminals and systems to accept Chip 'n' PIN cards by October 1st will be liable for any fraudulent transactions that affect a customer who has a Chip 'n' PIN card, but is unable to use it because of the merchant's lagging technology.
Click here to learn more about how the liability for costs associated with credit card fraud will shift from consumer to merchant.
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