This is the day when credit cards are supposed to change forever, thanks to a small embedded computer chip that will make many transactions more secure. But Thursday’s “deadline” for merchants to support the new EMV technology — or face the consequences if fraud occurs — is really a soft target, and consumers are unlikely to notice any dramatic changes or encounter difficulties as they make their shopping rounds.
The biggest change is behavioral. Instead of swiping a chip credit card, customers must now insert the end of the card with the chip into a card reader and then, after waiting several seconds, complete the purchase with a signature or a four-digit PIN. This procedure has been dubbed the “dip.”
Some experts say that could be the biggest source of first-day headaches, as shoppers and cashiers get used to the new process. But there may be a few other hiccups along the way. Here are five areas where the new technology could cause problems on “chip deadline day” and in the early days of its adoption:
Prepare for longer lines
While the EMV (an acronym derived from Europay, MasterCard and Visa) is more secure because the chip generates a unique purchase code every time the card is used, transactions will take a few seconds longer to process. Added to unfamiliarity with the “dip” process and there may be checkout delays, experts warn.
“Some people are experiencing a 20 second wait times with these chips,” said Avivah Litan, vice president and analyst at Gartner Research. “We’re a more rushed society than anyone else. So me, I’m going to be a little mad when I have to wait longer at checkout. You have to wait until the very end to get your card.”
Litan says retailers who have met the deadline will likely add cashiers to compensate for possible delays, and some may even create cash-only lines. But because many merchants and banks didn’t upgrade by the deadline, there will be a mix of swiping and dipping. It may take additional time for customers to figure out whether they have to swipe the old way or insert the new way, depending on the machine and depending on their card, which could cause further delays.
The technology itself has a few kinks to work out, too.
“I have several credit cards with chips in them and all but my American Express work really well,” said chip credit card user Marilyn Barnicke Belleghem. “Apparently, the chip (on that card) is placed in the wrong position to be accurately read on the machine at the grocery store where I like to shop.”
Don’t forget your card
If you’re forgetful, you’ll want to pay special attention at check-out.
“It's easy to forget your card in the reader,” said Nick Leffler, another credit card user who has been using his card at retailers that have already installed the new terminals. “Because you put your card in and leave it for the entire transaction, I've almost forgotten to remove it at the end several times.”
Your card might not work overseas
In other countries, chip cards come with PINs, which require the user to remember a four-digit number in order to use the card. Most U.S. chip cards won’t come with PIN technology initially, meaning shoppers will still confirm purchases with a signature. The problem is, some chip credit card machines in other countries aren’t equipped to accept signatures, so you might not be able to pay if you’re traveling and don’t have a card with a PIN.
“I actually had to go and withdraw cash in order to buy a mobile phone there, because the store literally couldn't take my card,” said Sally Elizabeth, an American who used her new chip card overseas. “Most stores will do chip and signature, but there is a lot of eye-rolling and searching for pens.”
It’s not as easy as requesting a PIN from your credit card company, either. The PIN associated with cash withdrawals from an ATM is entirely different from your chip PIN. If your credit card company doesn’t offer this technology, you’ll either have to pay with cash or get a new, PIN-compatible card from a different issuer.
For now, security is limited
Credit card companies and banks worry that adopting the full “chip and PIN” technology too soon in the U.S. will mean an even steeper learning curve, which is why many issuers are sticking with “chip and signature” cards to begin with. With only a signature required, we won’t have the full protection that a PIN offers. If a thief steals your chip card, they can still use it. They just have to forge your signature.
The new technology doesn’t protect against fraud in online purchases, either. Online transactions don’t require a terminal at checkout, so there’s no way to read your card and generate a code. All anyone needs is your credit card number, three-digit security code, and expiration date. If a thief gets their hands on this, they’re free to rack up online purchases in your name, though either the merchant or the credit card issuer will be liable.
We might see an increase in online fraud
As it becomes more difficult to skim and copy physical cards, many experts actually predict an increase in online fraud.
“If physical card fraud is harder, online fraud becomes more attractive,” said Liron Damri, COO of fraud solution platform Forter. “As an online fraud prevention company, we're extremely sensitive to what has been described as an oncoming fraud tsunami.”
Litan adds that this will almost certainly be the case, as it’s happened in other places. From 2009 to 2013, Europe saw a 40 percent increase in card-not-present (i.e. online) fraud, according to the European Central Bank. That amounted to a 4 percent increase in fraud overall.
So as the new technology rolls out, you’ll want to check your credit card statements more carefully.
The added hassle might motivate consumers to use phones to make wireless NFC (near-field communication) payments, which is quicker.
“I think this is going to spur an adoption of mobile payments,” said Gartner’s Litan. “They’re much more convenient. This is exactly what the credit card companies want you to do. The same culprits pushing chips, they would also like us to use our mobile phones. Then they don’t have to pay for physical cards, and it has the same security as a chip.”
Again, Europe may already be a step ahead.
“Now that contactless cards are rapidly becoming the norm in Europe, I'm hoping that Apple Pay will work for my next trip,” said Elizabeth, the American traveler.