After 20 years of being used in Europe, the US approved the use of EMV chip technology in debt and credit cards. This will begin to be applied on Thursday, and it is expected to reduce fraud significantly. EMV stands for Europay, MasterCard, and Visa, the main three companies that created this standard.

Stephanie Erickson, head of authentication and product integration for Visa, told this to NBC News: “In countries that have moved to chip technology, two years after the liability shift date, they see their counterfeit go down 60, 70 percent or more.”

There are two major benefits to moving to smart-card-based credit card payment systems: an improved security (with associated fraud reduction), and the possibility for finer control of “offline” credit-card transaction approvals. Credit: Mastercard

Using a microprocessor chip that provides better security, and the use of a unique transaction code, customers are now less vulnerable to fraud. Annual costs of card fraud in the U.S. alone reached $32 billion in 2014, according to a LexisNexis study.

“It makes it harder to physically counterfeit the card and it creates a unique transaction code that’s passed to the merchant every time you make a purchase with the card. So that means the merchant will have a lot less of your useable data and instead will have this unique transaction code,” says Matt Schulz, senior analyst at

If merchants don’t upgrade their system by October 1, the liability will shift from merchants to card owners. “The party, either the issuer or merchant, who does not support EMV, assumes liability for counterfeit card transactions”, MasterCard says in their website.

According to Payment Leaders, there are other advantages worth noting:

  • Many of the ATM manufacturers have already changed over to EMV-compliant technology, reducing costs on this front.
  • Chip-enabled cards, while initially more expensive to produce, have a longer shelf life than magnetic stripe cards, as well as being capable of ‘flash-updating,’ lowering their costs over time.
  • VISA offers merchants who make the conversion an incentive package, relieving some of the financial burdens on that side.
  • Adoption of EMV-compliant cards and devices is seen by many as a step toward wider adoption of mobile payment methods.


‘Dipping’ in the new technology

With the arrival of the new chip credit cards, both consumers and merchants are going to have forgotten about swiping their cards. Now they will have to ‘dip’ it to get paid. This represents a major change for shoppers and especially for business owners, which will have to invest $200 to $1000 to get the new payment terminals.

Ian Gibson, a Spokane, Washington-based director of Central Payment Washington, which processes transactions between businesses and banks, told the Spokane Journal of Business: “business owners are seeing the chip and investigating what it is. The last thing they need is another issue with a piece of technology in their business.”

Source: NBC News