Credit card chip rule

Credit card chip rule

Starting today there’s new rules for credit and debit card transactions in the United States. Any retailer or business without a reader for the new ‘chip-embedded’ cards will be liable for fraud committed on a transaction.

Short for EuroPay, MasterCard and Visa, EMV chips create a one-time-use code needed for each purchase, which makes stolen card numbers less valuable on the black market. Consumers may see slightly longer transaction times as in-store readers run the EMV cards, assuming merchants have set up the new payment terminals in time.

Analyst James Wester of research firm IDC said most large retailers, where consumers are most likely to use credit cards, will be fully compliant with the new EMV standard on October 1st. But Wester pointed out that the date is really the beginning of the transition, not the end, because it’s the point when the rules change for who might be on the hook for future credit card fraud.

“If a merchant accepts a magnetic-striped card … and a chipped card is available, any fraud on that card … the merchant’s now on the hook for it,” Wester said. Conversely, if a merchant accepted chipped cards, but a customer only had magnetic-stripped cards because her bank had not yet reissued an EMV card, than the bank would be responsible for potential fraud, he said.

George Meinz is a lawyer at Gray Plant Mooty in St. Cloud. He says a lot of small businesses have chosen to not invest in the new credit card readers.

The cost of changing over to the new card reader is not cheap for a small merchant. So, at least at this point, it seems a lot of small merchants are deciding that they’re just going to wait it out a bit and see what happens.

Meanwhile, card issuers that have not sent their customers a new chip-embedded card will be liable for counterfeit card fraud. Meinz says he expects that you’ll be receiving your new credit and debit cards by the end of the year, if you haven’t already.

In the meantime, your old cards will work in the new readers – and your new cards will work in old readers.