Cash or Credit?
Technology continues to march on. October 1st marked an important date and liability shift in United States. Credit cards now need to have a small embedded computer chip. You may have experienced the ‘insert the card here’ as opposed to swipe the card here as I did recently at Home Depot. Once the card is inserted the transaction is processed with a unique, one-time code unlike the “old-fashioned” credit cards. When a credit card was swiped, all the holders’ information was sent to process that transaction. Companies, specifically retailers, are struggling to adopt the new technology. It is an expensive update. So the October 1st deadline served as a liability shift for companies. As of October 1st, the companies are now responsible for any possible fraud with credit cards – not the banks or the credit card companies.
Also, several banks and credit card companies have yet to get these new cards in the hands of the consumers. The goal is to get them out by the end of this year. So you may be wondering why this change? Technological advances are great, but they need to have a purpose behind them. These cards are going to be more secure. Remember all the data breaches of large companies that have been in the news in the recent years? These cards will be processed with a unique code that is only used once. Such limited information will be sent over when the payment is processed and outsiders will be unable to access such information.
As with any new technology there are potential problems. The first relates to the consumers. Most everyone is used to swiping their credit card and signing. People will have to adjust their behavior and insert, ‘dip’, their card instead, as I described above. Once inserted, they will have to wait while it processes and then enter their pin or sign their name. It will take longer and has potential to make the lines longer. People who were already impatient (like me) will grow even more so as they will have wait longer just to make a simple purchase at the grocery store.
Once the purchase is completed, consumers will need to remember to remove the card and take it with you. These new cards are more secure, however, for online purchases where the card is not present the same fraud possibilities exist. Therefore, it is likely that online fraud will rapidly increase.
Future of Credit Cards
With this new technology, better security is at the heart. This is the main reason for the innovation and the change. However, because of these cards many think that mobile phone payments will become more popular. Mobile payments offer the same level of security as a chip and are a much more convenient option.
Eventually, all credit card companies and banks will send these cards out and more businesses will adopt the technology necessary to accept this new credit card format. With this new card, be on the look-out for any fraudulent online purchases. Actively manage your credit card account and be sure to check your statement closely for any unfamiliar purchases – which you should be a regular habit.