Depending on your credit card issuer, you may have noticed something new on your plastic of late – a silver or gold metal square that wasn’t there before.
What you may not know is that these smart chips are soon to become a standard in security for credit cards in the United States, and that U.S. merchants and ATM owners are expected to transition to accepting EMV cards in 2015.
This payments shift is the subject of a new infographic from Merchant Warehouse. Called “EMV: Coming to Your Wallet in 2015,” this tool provides helpful insights into how “chip cards” can reduce counterfeiting and fraud.
The infographic notes that smart cards are already widely used in Asia, Canada and Europe. Worldwide, there are more than 1.5 billion cards in circulation. Smart cards account for roughly 45 percent of all credit cards, and are accepted at more than 21 million point-of-sale (POS) terminals.
Still, the United States is lagging behind much of the world in embracing this technology. But what are the primary factors? Who is imposing the deadlines? And how will EMV reduce fraud? We’ll examine these questions and more in this PYMNTS.com Data point.
The Timeline For Merchant Compliance
Though many global merchants are equipped to handle smart cards, U.S. merchants have been slow to make the switch. The primary reasons for this hesitance are the high cost of replacing old technology and a lack of consumer demand for safer payments.
So, why are merchants readying for the changeover? EMV stands for Europay, MasterCard and Visa, and it represents a joint effort between these major financial institutions. Visa and MasterCard have both set deadlines for U.S. merchants and ATM owners, though these dates differ. Visa has given retailers four years to accept EMV-enabled cards, while MasterCard has given ATM owners roughly three years to make the transition.
How EMV Reduces Card Fraud
Research suggests that data fraud costs card issuers $2.4 billion annually, and the United States is a prime contributor to this total. Each of the last five years, the United States has been the number one country for credit card, due in part to the fact that merchants and ATM owners have not made the transition to chip-and-PIN payments.
Unlike EMV transactions, with involve unique data, traditional magnetic-stripe cards contain static data. This means that thieves can steal the information on traditional credit card to create forgeries or process online payments. This is much more difficult with EMV cards.
Best Practices For Businesses
The infographic also explained the differences at the point of sale merchants can expect under the new system, such as how EMV cards do not require a PIN or signature and how they can be used to authorize both online and offline transactions.
For more details about this major upcoming transition, view the Merchant Warehouse infographic below.