Have you received a new credit card, one with a chip, from your bank recently?
If so, and you should have, it’s part of a shift in the way credit and debit cards are being handled. Banks are now issuing their cards with a small chip in a bid to encourage adoption of a technology they say will make transactions more secure.
Today, October 1, is actually the deadline banks set for retailers to install and begin using the new terminals that read the chip. You’ll notice the change because instead of swiping, your card gets inserted briefly into a slot in the terminal (termed “dipping”).
What happens if your local grocery store or other retailer still has you swiping away after today? It basically means that any liability for credit card fraud would be borne by the merchant rather than the bank (as before).
Visa’s Stephanie Ericksen, vice president of risk products, told USA Today this week that the October 1 date is the one “by which if a merchant doesn’t have a chip terminal, and a counterfeit card is used at that location, they may be liable for that fraud on that transaction…[but] we’re seeing Oct. 1 as more of a kickoff toward increasing the momentum toward chip. People will still be able to use their magnetic stripes.”
According to the Washington Post, the chips are more secure than the traditional stripes because it transmits a unique code each time it is used for a transaction: “The idea is that any thief who is able to intercept the code won’t be able to use it again to make a fraudulent purchase with a fake version of the card later on.” The old-fashioned magnetic stripes send out the same information each time, making them more susceptible to fraud.
So keep an eye on the mailbox for your new card if you haven’t received it yet. Banks are still in the process of sending out new chip-enabled cards and they may not arrive until later this year or 2016.