Are you ready for the new wave of credit cards? Every credit card in the U.S. will be replaced by October 2015 with new cards that contain the chip-and-PIN technology that the rest of the world has had for years, according to the Wall Street Journal. No more black magnetic stripes; no more signing on the dotted line.
Americans who have traveled to Europe in recent years will know that the U.S.’s credit card system is embarrassingly old-fashioned by comparison. It’s often difficult to use American credit cards abroad because the Europeans abandoned magnetic stripes and signatures years ago — they were too easily hacked. Credit and debit cards in the U.S. are about 10 years behind the rest of the world.
The new cards contain a microchip and require the owner to enter a PIN into a payment machine at checkout. They are making harder for people to hack or use someone’s identity.
First, requiring the PIN prevents checkout staff from handling your card — they will simply hand you the point-of-sale device and customers will insert their cards and verify payment themselves. In 2015 (partially) the US will continue to move towards the EMV (Euro/MC/Visa/ Chip Card. The cards are already out there and the 1st wave of EMV compatible terminals are out there as well. It will cut down on fraud amongst other things. The U.S. and other countries will eventually move to the contactless technology as well.
Second, the chip replaces the magnetic stripe, which is easily copied and therefore vulnerable to hackers, as the Target sting proved. In France, chip-and-PIN allegedly reduced credit-card fraud by 80% (although the sourcing for this number is vague).
In fact, the reason the U.S. is being forced into making the chip-and-PIN change now is that the fraud industry migrated from Europe to America simply because U.S. cards were easier to hack than the European ones, according to MasterCard’s Carolyn Balfany, the company’s expert on the change.