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New chip card rule kicks in Thursday

<p>People across the U.S. have been receiving new credit cards from their banks recently. And while these new cards might look similar to old ones, they&#39;re vastly different technology wise.&nbsp;</p><p>These cards have&nbsp;<a href="https://www.chasepaymentech.com/faq_emv_chip_card_technology.html" target="_blank">several different names</a>: Chip-and-pin cards, chip-and-signature cards or EMV, which stands for developers Europay, MasterCard and Visa.</p><p>Whatever you call it, they all have microchips embedded in them. Users will now slide these cards into chip-enabled terminals and either input a PIN number or sign their signature when paying for items, instead of swiping their traditional magnetic-strip credit cards.&nbsp;</p><p>While this is new technology for the U.S., these chip technology cards have been used for years in other countries across the world. (Video via&nbsp;<a href="https://www.youtube.com/watch?v=SJgs_6KtgV4" target="_blank">WKRC</a>)</p><p>&quot;We are way behind the rest of the world. If the rest of the world is using iPods, we&#39;re on eight-track tapes. That&#39;s how far we are,&quot; CBS News analyst&nbsp;<a href="https://www.youtube.com/watch?v=PrtCcZRFmBM" target="_blank">Mellody Hobson said</a>.</p><p>The&nbsp;<a href="https://nrf.com/advocacy/policy-agenda/data-security" target="_blank">National Retail Federation</a>&nbsp;has been advocating for chip technology in the U.S. for years because it&#39;s much harder to hack and it made a big push after the massive data breaches at Target and Neiman Marcus in 2013.&nbsp;</p><p>&quot;Whenever the chip card is used with a chip-enabled terminal a unique one-time code is created for the purchase to be approved. This is nearly impossible for counterfeit cards to duplicate.&quot; (Video via&nbsp;<a href="https://www.youtube.com/watch?v=rAISexIUZcs" target="_blank">U.S. Bank</a>)</p><p>Of course, this security feature currently only protects those using their cards in the store — not those paying for purchases online.&nbsp;</p><p>Currently, consumer losses from fraudulent charges are paid out by either the bank or the payment processor, but after Oct. 1,&nbsp;<a href="http://www.creditcards.com/credit-card-news/emv-faq-chip-cards-answers-1264.php" target="_blank">CreditCards.com</a>&nbsp;says the liability &quot;will shift to whichever party is the least EMV-compliant.&quot; (Video via&nbsp;<a href="https://www.youtube.com/watch?v=hz9HKNj1-m8" target="_blank">CreditCards.com</a>)</p><p>Wal-Mart, Target and Whole Foods all say locations will have the new chip-enabled terminals for these new cards in place by that deadline.</p><p><i>This video includes images from Getty Images.</i></p>
Posted
Starting Thursday, businesses that accept credit cards must be prepared to handle transactions with new chip-embedded cards or find themselves paying the bill in the event of fraud.
 
The credit card industry set Oct. 1 as the day when liability for fraud committed with the new cards will shift to retailers and other businesses if they don't have equipment to process chip card transactions. The chips in the cards are harder to counterfeit than the magnetic stripes on millions of cards, but they require new card readers and software to process transactions. If a counterfeit card is used in a transaction and a business doesn't have the new equipment, the company will be liable for the financial losses it suffers.
 
 
However, little is expected to change on Thursday at many small businesses. A number of banks and other card issuers still haven't sent the new cards to their customers, who will continue to use their magnetic stripe cards. It's expected that millions of the older cards will still be in use going into 2016. And at least for the time being, it's not expected that thieves will have figured out how to copy the information on the chips.
 
Although many national retailers have upgraded their equipment, many small businesses haven't. A Wells Fargo & Co. survey taken during the summer showed that only about half of small business owners were aware of Oct. 1 deadline. Only about a third had the new equipment and less than a third said they planned to get it by the deadline. Over time, many companies may feel more pressure to update their equipment.
 
The simplest card readers are expected to cost at least $100, and the most basic software starts at several hundred dollars. Some small businesses can get their readers and software for free from the companies that process their credit card transactions. An additional cost for many companies will be an information technology consultant to get the new systems up and running.
 
Businesses like restaurants and stores that link their payment systems with their order and inventory tracking systems are likely to have the biggest expense. So are companies that have multiple locations.
Associated Press 2015
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