Paying with a credit card has become like clockwork for most of us. We don't even have to think about swiping the plastic in our wallets.
Come October 1, however, things will start to change due to the nationwide migration to EMV technology.
With EMV — which stands for "Europay, MasterCard, and Visa"— you'll start "dipping" your credit and debit cards into a terminal slot.
Rather than reading the magnetic strip on the back of your card, payment processing systems will read a microchip on the front of your card, which aims to improve security and reduce fraud.
Here's what you should know as the October 1 deadline approaches:
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This is not new technology.
Chip technology has been widely used in Europe and other parts of the world for several decades in order to combat fraud.
The traditional cards with magnetic strips are decades old, and they're easy for fraudsters to forge. With the EMV technology and chip-embedded cards, forgery is much more expensive.
"Historically, the weakest link has been in the card," says Nuno Sebastiao, CEO of Feedzai, a data science company that detects payment fraud. "It's very easy to copy the stripe on a card. With a chip, that will be much harder. It's still doable, but it becomes much more costly."
While the US is gradually catching up to Europe with this technology, we're still lagging in more ways than one.
In the US, after dipping your card, you'll sign a receipt — in Europe, you dip and enter a four-digit personal identification number, which is more secure than the dip-and-sign procedure. Banks can choose to issue cards that require a PIN, but it won't be required in October 2015.
Businesses without EMV cards or terminals will be responsible for potential fraud.
Currently, if you fall victim to credit-card fraud, your issuing bank will pick up the tab and insure you.
Starting October 1, the responsibility will shift to the merchants — if they're still using the old "swipe and sign" system and don't accept a chip-enabled card. If the merchant accepts EMV cards, the issuing bank will insure you like it does today.
It works the other way around as well. If the merchant has the new terminal but the bank hasn't started using a chip card, the bank will be responsible.
This means there's incentive for merchants to start updating their in-store terminals to be EMV-compliant and for banks to start issuing new, chip-enabled cards.
You won't start exclusively dipping your card October 1.
October 1 is a soft deadline. There won't be an instantaneous shift at the start of the month — many merchants don't even have the new equipment installed, and some banks haven't issued new cards to all their customers.
"This is the first step in a larger transition," says Thiago Olson, CEO of Stratos Card, an all-in-one connected Bluetooth card. "As we're seeing, a large majority of merchants, and the vast majority of small merchants, haven't even heard of EMV yet. It's the beginning of the push to start switching over, and it will be a several-year-long process before consumers start dipping cards instead of swiping cards here in the US."
The card networks — Visa, Discover, MasterCard, and American Express — are front-running the liability shift and have set the October date. It remains to be seen how strict they'll be with the deadline, as so many merchants aren't ready for the transition, Olson explains.
See the rest of the story at Business Insider