Consumers Learning to “Dip” Their Credit Cards
If you have recently received a new credit card in the mail, you may have been asked to “dip” your card when you made your transaction at the store. “Dipping” is replacing “swiping” in today’s world of credit cards.
New chip technology in credit cards and point-of-sale terminals are finally being launched across the nation. MasterCard estimates that 65% of cards will have chips by the end of 2016 and 95% by the end of 2017.
What is spurring the change? In October, stores that have not upgraded to accept the new chip credit cards could be held liable for fraudulent charges that take place. Currently, credit card providers and processing companies are the ones held liable for unauthorized transactions. The new chips are very hard to forge, and banks want to transition to the new cards to cut down on their fraud losses.
So consumers will probably be “dipping” soon. If you haven’t dipped yet, it is fairly easy. Slide the card in the slot of the bottom of the machine with the chip facing up, and leave it there until your purchase is complete.
The transition will cost retailers and card issuers close to $9 billion, but is long overdue. Europe and some of the other parts of the world have been using chip embedded cards for years.
Analysts feel that approximately 60% of card processing terminals will accept chip cards by the end of 2015, and 90% will by 2017.
The new chip system’s official name is EMV, which is named after the companies that built it: Europay, MasterCard and Visa.
There are some concerns about these new cards.
The United States is only opting for a portion of the enhanced security. Most cards now being sent to consumers are “chip and signature” cards. After being inserted into the processing machine, consumers only have to sign their name to complete the transaction. A much more secure form of the EMV card is the “chip and PIN” card where consumers have to add an individualized four-digit PIN number instead of the signature. A thief would have to know your PIN number in order to complete a transaction, making the chip and PIN card much more secure. Unfortunately, credit card issuers chose not to implement this extra security feature, most likely due to the additional cost. Retailers were not happy about that decision.
“The fact that we didn’t go to PIN is such a joke,” Mike Cook, Wal-Mart’s assistant treasurer told CNN. “If you look at the Target and Home Depot breaches…not a single PIN debit card needed to be reissued in those breaches. The card number was worthless to the individual thief and fraudsters, because they didn’t know the PIN.”
Another concern is that many businesses are not prepared for the upcoming October 1st deadline for processing chip-embedded credit cards, according to a new survey from Randstad Technologies. The survey found 66% of IT decision makers, including “C-suite executives” (Chief Executive Officer, Chief Financial Officer, Chief Operating Officer), do not believe that chip and signature cards provide enough security, and that PINs should be mandatory for card transactions. The survey also revealed 42% of decision makers have no plans for switching to EMV technology at this time.
Most terminals will still accept cards with just a magnetic strip for a few years, so don’t be concerned if you still have a “swipe” card and not a “dipping” card.