Two years ago the credit card industry in the U.S. self-imposed a deadline of October 1st as the cutoff date for switching everyone over to EMV cards or as they're also known chip-and-pin cards. On this date the responsibility for any losses from fraudulent card transactions would also switch to retailers who didn't upgrade their card readers to accept the new cards.
The cards contain a microchip that create a unique code during every transaction reducing the possibility of fraud (old cards use magnetic strips that can easily be skimmed and reused).
The EMV payment system designed by Europay, MasterCard and Visa is a welcomed measure against credit fraud, but the problem is that not everyone has received the new cards. According to a CreditCards.com survey, more than six out of 10 card holders say they have not gotten a new microchip card.
Don't panic! You're still protected against fraudulent credit card transactions even if you don't have the new cards, but the fact that such a large part of the population hasn't received their new cards does beg the question: why have a deadline for the switch?
Furthermore, that same CreditCard.com survey estimates that about 12 million payment terminals will have to be upgraded to accept chip cards, a move that the Retail Industry Leaders Association estimates will cost more than $8 billion. The truth is that the majority of merchants aren't actually prepared for the shift. A survey published by Wells Fargo in August reports that less than half of small businesses reported being aware of the shift in liability on October 1st and that only 29 percent of business owners planned on making the change before the deadline.
All the information coming out at this time points to a lack of cooperation from all parties involved in this change: banks, merchants and retailers, and credit card companies. Chase's Director of Card Services, Dina DeMerall told Yahoo Finance, "We're trying to get the word out that you need to adopt. We've seen tremendous reduction globally in counterfeit fraud with the inception of chips, [but] unless all parties work together to make this change happen, we're not going to see the benefit."
What this means for us, the consumers, remains to be seen, but we want you to remember that once you do receive your new chip-and-pin card, don't consider yourself immune to credit fraud. As we've mentioned before, this advancement in stamping out fraud at point-of-sale terminals will probably be followed by a rise in "card-not-present" or CNP fraud. Don't throw caution to the wind—be meticulous about combing through bank and credit card statements. You might also consider signing up for a credit monitoring service to keep an eye on your credit files.