This isn't an overnight switch
The acronym stands for , MasterCard and Visa — the entities that developed the new chip format. Cards equipped with EMV chips already are in use in Europe, Canada and other places.
In this country, banks have been sending new cards to customers throughout the year, though the process is far from complete. The American Bankers Association estimates that 575 million chip cards will have been issued by the end of 2015. But not everyone will have them for another couple of years.
The cards work a bit differently for consumers
You can tell if you have one of the new cards by looking for a gold or silver square or rectangle on the cover. Consumers don't swipe their cards but, rather, insert or "dip" them into terminals — face up and with the chip facing forward. Then they must wait for a transaction to finish, after all the items have been rung up. Consumers also might need to answer a few prompts on the terminal screen. You can't pull out the card before this process finishes, which is signaled by a beep or instructions from the cashier.
Transactions take a bit longer to process. How much longer won't be known for a bit longer. "This will be the first holiday season after the transition," said Rob Nichols, incoming president and CEO of the American Bankers Association. "It will be an instructive holiday season for our industry."
The bigger issue is remembering to pull your card from the machine when finished. When swiping, you never let go of your card. But this time you might let go, then forget.
The new cards have little microprocessors in them
One reason EMV cards are more secure is that the information on swiped cards isn't encrypted. Also, the new cards contain tiny microprocessors that run software that produces a code, or "cryptogram." This code is sent across the network during a transaction and is required for authorization by the bank computer on the other end. Suspicious transactions can be spotted and stopped. Each code can be used only once. The chips themselves are difficult to copy or counterfeit.
The new cards carry the same fraud protections — for consumers
On credit cards, card holders by law are on the hook for a maximum $50 in fraudulent charges, but many banks absorb the losses completely. That doesn't change with the new system. "Customers are fully protected," Nichols said.
On debit cards, the liability depends on how quickly you notify the bank. If you make the report before any fraudulent purchases, you bear no liability. But it rises after that. After 60 days, you could be liable for all malicious transactions. But again, these liability points don't change.
But there is a liability shift for merchants, many of whom haven't yet upgraded terminals to process the new cards. Starting in October, retailers could face fraud losses if they accept swiped transactions on EMV cards that could have been processed on new terminals. One major exception involves card readers at gasoline stations, which are more costly and complex and don't have to make the shift until October 2017.This liability change, and the need to upgrade terminals, is a source of bickering between the banking industry and retailers.
The new cards won't eliminate all card-focused fraud
The new cards should cut fraudulent activity on transactions in stores, but that doesn't erase all fraud issues. EMV cards do make in-store transactions safer, but not those done remotely.
Fraudulent charges still can be made over the phone or Internet by criminals armed with stolen account numbers and other information. Thus, consumers still need to safeguard their personal information and steer clear of suspicious websites.
Adam Levin, chairman of Credit.com, suggests that it's wise to limit the number of credit and debit cards that you carry on shopping excursions. It's also smart to sign up for alerts with your bank or credit card companies that notify you of transactions. Levin recommends monitoring for unauthorized account openings by ordering your credit report through www.creditchecktotal.com.
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