'Smart' Credit Cards Could Be Heading Our Way


RENO, Nev. Could your credit card soon be out of date? In light of the Target data breach back in December, many people have been calling for the United States to adopt the EMV, or (Europay, MasterCard, and Visa, the developers of the technology's standards) cards used in about 130 countries across the globe.

Known by several names, including smart cards, 'Chip and PIN', or 'Chip and signature', these cards are said to be more secure than the traditional magnetic strip used on most credit cards in the US. That strip contains the card's number and expiration date, making it easy for thieves to duplicate. Much of the rest of the world uses a small chip on the credit card which encrypts transaction data differently each time the card is used .

But major credit card companies, retailers, and members of Congress are calling for the smart cards to come to America.

Which means the way you pay, is about to change.

But it comes at a price. The cost to bring smart cards to this country are high- estimates have ranged between $8 billion and $35 billion. Banks will have to issue billions of new credit cards, and ATM's will have to be replaced. But the bulk of the expense will be shouldered by retailers, who will need to install new high-tech card readers.

And if they don't, they could end up paying more.

"Even though we roll out the cards, the fraud may not go away unless the machines are upgraded," Rick Hassman, VP of Finance for Greater Nevada Credit Union said.

Major credit card companies like VISA and MasterCard have set an October 2015 deadline for the new system to be adopted. After that, they will implement a 'liability shift' meaning the party with the oldest technology will be liable for fraudulent activity.

Meaning merchants who have not upgraded their processors could end up paying the price.

But there are some issues to iron out before the cards hit your wallet.

One issue revolves around the Durbin Amendment. The amendment which was part of the 2010 Dodd-Frank Financial Reform Legislation, requires debit cards to support at least two unaffiliated networks, something the EMV cards can't currently do.

"Typically one chip is related to a specific processor, so a Visa or a MasterCard, somebody like that," Hassman said. "You're required by the Durbin Amendment to have multiple processors on a debit card. So within a chip, you'll have to have multiple processors and that's very costly and complex and causing some concern from a regulatory standpoint."

He says there's talk the October deadline could be extended, but admits the smart cards are something we will see in America in the future. In the past six years, England has seen at 34% drop in credit card fraud since they've adopted the new cards. Some experts say America has become the main target for hacking and fraud since we are the last major market in the world to adopt the cards. Some believe once we do, online shopping can become more dangerous since the chip technology doesn't work with 'card-not-present' technology.

Some major credit card companies have already issued the cards in the U.S. to companies or people who travel overseas frequently. For the most part, customers must ask their card provider for the technology.


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