Making a Case for EMV

Come 2015, experts say nearly all credit cards in the United States will be embedded with an encrypted chip that requires a PIN to activate it.

January 13, 2014

MCLEAN, Va. – In light of the recent Target data breach, more attention is being paid to EMV (EuroPay, MasterCard, Visa) cards as a way to help protect personal consumer information and reduce counterfeiting.

USA Today reports that cards embedded with an encrypted chip, which requires a personal identification number to access, “represent the latest weapon in the battle against counterfeiters.” And according to industry experts, up to 95% of credit cards in the U.S. will have the chips by 2015 — a significant jump from the mere 1% to 5% of cards in the U.S. today that use the technology.

Bruce Schmiedlin, an accountant at The Grimes, is among the roughly 5% of cardholders in the U.S. who has an EMV MasterCard. Using his card, however, brings to light a learning curve that merchants will need to address sooner than later — MasterCard is mandating that issuers and merchants must come on board with EMV by Oct. 1, 2015, or face greater liability and penalties for instances of credit card fraud.

"As a consumer, I was disappointed (card issuers) didn't give any education for consumers to help the merchants," Schmidelin told the newspaper of a run-in with a clerk who was confused by the EMV card. When the clerk swiped Schmiedlin’s card, he was prompted to insert it into an EMV-compatible terminal.

USA Today noted that experts admit EMV cards “won't eliminate fraud if a card is lost or stolen; they are aimed at reducing counterfeiting.” Citing U.S. Department of Justice data, one-third of fraud reports are related to counterfeit cards, “the largest percentage of credit card fraud.”

For now, U.S. EMV cards have both a chip and magnetic strip to ease the transition, but the goal is to move all credit card holders to chip-only cards. In the meantime, as more merchants adopt EMV, consumers like Schmiedlin could face similar frustrations with untrained cashiers. But frustrations aside, he says the trade-off is worth it.

"Even if they get your swipe data, if everyone goes over to the chip readers, that will be a whole lot harder to produce," he told the newspaper. "It's a step in the right direction."

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