credit & debt

6 Things You Must Know About Chip Cards

Their rollout has been slow, spotty and sometimes frustrating.

1. Deadline? What deadline? New rules went into effect last October that make merchants liable for fraudulent transactions if they haven’t updated their terminals to accept chip-card, or EMV, payments. But as of late January, merchants had activated chip-card readers at only 17% of in-store locations, according to Visa; only 50% of locations were expected to have functioning readers by the end of 2016. Card issuers are doing a little better. There are more than 400 million chip cards now in circulation, says Randy Vanderhoof, director of the EMV Migration Forum—but that’s still only one-third of the estimated 1.2 billion total cards on the market.

2. They’ve got your number. The microchip in an EMV card drastically reduces fraudsters’ ability to create counterfeit cards. But it doesn’t prevent crooks from using a stolen card number to pay online or over the phone. Canada saw a 133% spike in fraud involving such “card not present” transactions from 2008 through 2013, as the country made the switch to chip cards, according to Aite Group. (For more on how to protect payments online, see How to Make Your Chip Credit Card More Secure)

3. Signature versus PIN. Chip-card users in the U.S. typically seal the deal with a signature, rather than by entering a PIN. That’s not much of an obstacle for a thief who gets hold of your card. “Chip-and-signature is a half-measure,” says Debra Berlyn, director of the advocacy campaign ProtectMyData.

4. Speed bumps at the register. Glitches abound as merchants work through the learning curve. For example, some restaurants that have enabled EMV payments have improperly configured tipping options, says Vanderhoof. Some stores haven’t activated the chip capability on their payment terminals because they are still making sure the equipment is ready for prime time and their employees are properly trained. The word “insert” on the terminal’s screen is your clue that you should dip your card in the chip-reading slot, says Gregory Burch, vice president of strategic initiative for Ingenico Group, a provider of payment services and terminals. Chip transactions typically take a few seconds longer to process than those with a magnetic stripe, but many merchants are shortening the delay as they optimize their systems.

5. Swipe with care. Operators of ATMs and automated gasoline pumps were given a liability reprieve. MasterCard extended the deadline to October 2016 for ATMs to support updated card readers, and Visa’s ATM deadline is October 2017. Owners of gas terminals that aren’t EMV-compliant also won’t face liability until October 2017. In the meantime, watch out for “skimmers” that crooks place on card readers to steal data from your card’s magnetic stripe. Pull on the card reader and surrounding area to see whether anything moves, and shield the keypad with one hand as you enter your PIN with the other to conceal the number from hidden cameras.

6. You’re still covered. The move to EMV affects the liability of merchants and card issuers. But most credit card users still enjoy zero liability for unauthorized purchases, and banks will usually cover funds stolen with a debit card as long as you report the problem promptly.

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