4 Downsides To EMV (Chip) Credit Card Technology
Most consumers have heard the reasons credit card companies are investing in new technology in order to keep their customers’ valuable personal and financial data safe. Hackers and identity thieves are using sophisticated tactics in order to get their hands on people’s financial information.
One of the changes taking place in the credit card industry is the move to EMV technology. EMV technology refers to credit cards with a microprocessor embedded inside of the card. The card has a contact plate on the front, which allows for information to be transferred and authorization to occur once the card is input into a terminal. Chip and PIN card users also have to enter a PIN number for each transaction they make. While EMV cards can’t be skimmed like cards with a magnetic strip, there are some concerns about the switch to these cards.
The Move Will Be Extremely Expensive
The move to EMV technology is going to be an extremely expensive one. The process of implementation won’t be expensive for just credit card companies either—it will also be a major hit on merchants, who will likely have to purchase new terminals and POS systems—which could cost merchants hundreds or even thousands of dollars. Some industry analysts believe that the full cost of purchasing new EMV-compatible terminals would be $7 billion. The cost of issuing new credit cards themselves could cost as much as $1.4 billion—with more than 600 million credit cards and 500 million debit cards having to be replaced. Not to mention the more than 350,000 ATMs that will need to be upgraded or outright replaced in order to read, accept, transmit and receive data from EMV cards. The cost of replacing all ATM machines could potentially run as high as $500 million. All of these costs add up to a significant amount–and it is usually the consumer that pays for this, in one way or another.
Privacy Concerns And Problems With Data Transmission
EMV credit cards have the potential to have wireless capabilities. That means your card could be hooked up to wireless networks without your knowledge, with potential identity thieves able to wirelessly determine your location and your recent purchases. EMV credit cards also carry and transmit much more data than cards using magnetic strips, which means credit card companies will likely need to invest much more in theft prevention than they already have. While EMV credit cards are widely assumed to be safer than magnetic strip cards, they have their own security flaws that can also be exploited.
Lengthy Transition Period
The costs of EMV technology are well documented. Replacing ATM machines, POS terminals, and credit and debit cards is going to be an extremely expensive and difficult process. It’s also going to be something else—lengthy. That is why you are seeing a lengthy transition period. Merchants, card issuers, and banks have been slowly changing their technology to fit the EMV model. While the process has been cumbersome, it is expected to make transactions safer after potential security flaws are closed.
While credit card companies and cardholders both want to protect their valuable data, there have been many hurdles to overcome in this EMV transition. The cards are expensive to manufacture, and there is no doubt that credit card companies will pass some of those costs to consumers. Credit card companies will also have to deal with similar privacy concerns and data transmission issues that currently plague magnetic strip credit cards—even though EMV cards are widely considered to be safer. Most credit card consumers can expect to have a new EMV card by October of this year, so make sure you familiarize yourself with the technology!