A recent CNBC article (1) discusses the security benefits of credit card technology that uses computer chips (EMV technology) and (2) explains why America lags behind many other major countries in its conversion from the magnetic strip to chip technology. According to the article, EMV technology, also known as Smart Chips, was developed a couple decades ago by Europay, MasterCard, and Visa (hence the name EMV technology), and some of these chip cards now also use PINs similar to those found on debit cards.
Many European countries turned to EMV technology to comply with anti-fraud laws. Money explains why America has been slow to adopt this technology, according to the article. It cost banks as little as 50 cents to issue a magnetic strip card while a chip and PIN card costs several dollars. Additionally, there is significant cost associated with the replacement of the point-of-sales equipment to accommodate chip cards.
However, the credit card networks (American Express, Discover, MasterCard, and Visa) have announced plans to move to an EMV-based system in America. According to the article, the current upgrade deadlines are:
- October 2014 for banks to issue chip cards
- October 2015 for retailers to install equipment to read these cards
After October 2015, a bank or the retailer that fails to upgrade to EMV will be liable for any fraud.