The “dip” will soon become the norm when using the new credit cards starting this October or by year’s end.
The new cards are high-tech with microchips inside, for the purpose of making financial transactions more secure (they’re already widely used overseas and are finally emerging here in response to the massive credit-card data breaches); they have a small gold or silver rectangle on the front of the card just above the first four digits of the card’s number. Instead of a sliding swipe, these cards are inserted, or “dipped” into a slot, to sit (for a second or two; there’s a ‘click‘ that you’ll feel when the card’s in right).
Chip cards are nearly impossible to counterfeit even with stolen account information, unlike regular credit cards. And if a chip card is lost or stolen, a second security measure can make it useless. Few American-issued cards, however, are set to deploy this second safety step, and that has some security advocates howling.
Also starting in October, a new credit-card rule imposed by Visa and MasterCard will take effect; it concerns who’s liable when thieves get away with fraudulent transactions on a counterfeit card. Visa has stated that banks who fail to get chips into customers’ cards by Oct. 1st will be held accountable for any fraudulent transactions that involve using a counterfeit regular credit card. And also, merchants who allow their customers to use the current regular cards after Oct. 1 will be held liable if those transactions turn out to counterfeit.
Currently, banks are held accountable for fraud when counterfeit cards are presented to merchants; merchants are in trouble for any online credit-card fraud (no card is physically presented to the merchant).
Not all consumers will have the new chip cards by the October deadline, however; UMB Bank, for example, expects to need all of this year (2015) to successfully complete its switch: “Everybody’s doing it, and the issuers have built queue lines,” said Mike Hagedorn, UMB’s president and chief executive (regional and small banks are behind the larger ones).
The microchip is actually only half the security (and many say it’s still not enough); overseas, consumers who dip the chip cards also typically enter a four-digit number (the PIN–personal identification number) to confirm the charge. It’s this PIN that adds the second layer of security. So a lost or stolen card becomes useless because the finder or thief won’t have the PIN to enter. The alternative is to handle chip-card transactions the same way as regular cards, and require consumers to verify transactions by their signatures.
Most banks plan to go with chip-and-sign cards (many have concerns that card users won’t remember their PINs).
Source: “Microchips emerge as alternative to swiping”-The Kansas City Star (TNS)-The (Sunday) Vindicator, February 15, 2015