EMV Credit Cards Interview with KPCC Radio Southern California
CreditCards.com reporter Sienna Kossman spoke on Tuesday, September 29, 2015 with Alex Cohen of KPCC Radio Southern California about the September 2015 EMV Credit Cards survey. The interview and transcript are below.
Alex Cohen: But first a look ahead to the brave new world of chip and pin. Perhaps you’ve recently received a new credit card in the mail with a small square embedded in it. The U.S. is now shifting to this new mode of pay, with a key deadline coming up this week. Here to explain what this means for you as a consumer and why many shops may not make this deadline is Sienna Kossman, reporter at CreditCards.com. Sienna, thanks for joining us.
Sienna Kossman: Hi Alek, thank you for having me.
Cohen: Let’s begin with the ABCs, which in this case is actually the letters EMV. What does EMV stand for?
Kossman: Sure, well that abbreviation stands for Europay MasterCard and Visa, which is kind of the networks that started this whole type of payment technology.
Cohen: And so this chip, and chip and pin, is often referred to as the EMV chip and we’re moving towards this because it’s supposed to be more secure than the standard magnetic stripe-swipe that we’ve used for so long. Why is it more secure and how much more secure is it?
Kossman: Well, the little metallic chip that you see on so many of these cards actually makes a unique transaction identifier when you dip the card. So for each transaction there’s a code that goes with it that is very hard for fraudsters to duplicate or do anything with as opposed to mag stripe data, which they can take and get your information and make duplicate transactions. And this particular technology is supposed to really help combat counterfeit fraud, which is a big problem here in the U.S.
Cohen: Where have these chip and pin cards been used so far and how well has it worked out in those places?
Kossman: They’ve been used primarily in Europe for years now and it’s actually done a pretty good job cutting back counter fraud in those areas. I think I saw stats the other day that between 2005 and 2013, something like 70% of their counter fraud was able to be reduced. So hopefully we see something like that over here.
Cohen: I have to confess I was looking through my wallet today. I have a number of credit cards, but it looks like only one of my credit card companies has actually sent me the new chip card. Is that average, is that cause for concern?
Kossman: No, that’s not cause for concern and that’s actually pretty average. In fact, I just started getting chip cards myself last week. Card issuers are doing this at their own pace and there are millions of cards that have to be reissued. So this is a huge process and everybody seems to have their own method in terms of who’s getting cards when and that sort of thing. I would recommend if you don’t have your chip card yet for any of your credit cards, call your issuer and they should be able to give you more information in terms of when you’re getting your card or when you’re not getting a card. And in many cases you may able to actually request that you get a card sent to you sooner.
Cohen: Last time I checked it was Tuesday. As far as I understand it Thursday, which is October 1st for the other partner in all of this, which is the stores, the places that would actually use these chip and pin cards – tell us a bit more about this deadline. Who set it and why?
Kossman: Sure. So Thursday’s the October 1st fraud liability shift deadline. It was set by some of major payment networks in the U.S., like MasterCard, Visa, and Discover, American Express – those sorts of organizations. And it’s really aimed at the merchants and the issuers and who will be responsible for handling any fraud chargebacks that may occur if one of the parties is not upgraded to EMV technology. So for example, if after Thursday, October 1st a cardholder with a chip card goes to a merchant that doesn’t have a terminal that can accept and process that chip card, they can still use the mag stripe, but they can’t process the chip card. And for some reason some fraud occurs in some form, that merchant would be the least EMV-compliant party and they would be responsible for covering the fraud costs or that fraudulent transaction. Whereas before most card issuers would have just covered the fraud costs.
Cohen: Which seems like it would be good motivation for the stores to jump into action and get this on-board. But what are some of the challenges that stores are facing in terms of why they might not meet this deadline of October 1st and take their chances?
Kossman: Well, just like how card issuers, it’s taking them a little bit to get chip cards out to all the cardholders, it’s going to take a little while for retailers to get on-board and get the new payment terminals and understand the new processing systems and upgrade their computers and that sort of thing. There’s a lot of kind of technical back-end things that they have to do. And some of that does come with a cost, which for small retailers can feel burdensome and confusing and they might not be able to do it right away. Thursday isn’t like a firm deadline like “You have to have that done by,” but the sooner they get it done, the better obviously. But for some it’s a bigger process than it is for maybe larger corporations that have a better system like that in place.
Cohen: And Sienna, is there – I believe you put it – a firm “deadline” deadline, at which point in time you really do have to have, be ready to take these new cards or else?
Kossman: Not right now. This October 1st migration of the fraud liability shift has been kind of the starting off point for this. And I think because the process is such a big transition for all parties involved, I think we’re going to have to see how it goes and see how everything progresses as the rest of the year goes on into next year to kind of find out if more regulations will be put in place or if any more deadlines or that sort of thing. I think right now it’s a little bit too early to tell.
Cohen: In this case there’s kind of “it takes three to tango,” right? You need the credit cards and banks issuing the cards, you need to have stores that are ready to use it, but there’s also us, the consumers. What sense do you have of how ready we are to do this and what are some of the challenges that we might face?
Kossman: I think just like the retailers and the card issuers, the consumers knowledge with this whole change is also all over the board. I think some people may have been getting chip cards for the past year and they might be really up to speed with all of this and are already using their chip cards and not having an issue with it. But others may not have a chip card yet and may not even know that this is happening or go to a retailer and try to use the card and the terminal prompts them to do something that they’re not used to doing. So I think the consumer experience is going to be very mixed, but I guess from a simple angle what consumers should know is that they’re going to be getting these new chip cards sooner rather than later, if they haven’t already. And the biggest difference is that when you get to a payment terminal that’s ready to accept and process the chips on the card, you’re going to “dip it” – insert it into a little slot – wait a few seconds and the terminal will walk you through the rest of the transaction to process it as a chip card. If the terminal can’t accept the chip cards through the dipping process just yet, they’ll still be able to swipe their cards, just like they’ve been doing for years with the traditional mag stripe card because they’ll still have that stripe on the back just to kind of ease this transition so everyone gets up to speed. So it might take a few more seconds to make your transaction at the terminal, but other than that, that’s really the biggest change that consumers will have to get used to as they start getting these cards.
Cohen: And of course these new chip and pin cards, they only work for in-person transactions. What about online purchases or giving your credit card number over the phone when you’re, let’s say, ordering flowers or whatever – chip and pin really isn’t going to help you there, is it?
Kossman: Right, and I think it’s important to note that most of the cards that we’re getting are actually chip and signature where it’ll process the chip and you have to sign like there’s a traditional credit card. The pins are expected to come a little bit later. But yeah – same idea. Chip and signature – if you’re doing transactions over the phone or online, you’re still going to read the person or type in your card number just like you are now when you make a purchase online, and you don’t get that added layer of chip security that that little technology provides. But this is a solution that’s specifically targeted at counterfeit fraud. So you still want to use all the same protections and kind of carefulness that you would if you were making a phone transaction or online transaction before this technology even came into our country. So it’s changing one particular type of transaction, if that makes sense.
Cohen: It sure does. Sienna Kossman, reporter at CreditCards.com. Thank you very much for your time.
Kossman: Thank you.