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ATMs to take ‘chip’ cards, or else

By Claes Bell · Bankrate.com
Monday, September 17, 2012
Posted: 11 am ET

MasterCard announced recently it is going to ratchet up pressure on ATM owners to upgrade to machines that can read EMV-enabled cards. If you're not familiar with EMV, it's a technology standard that ups debit card security by incorporating a tiny chip into each card issued to users. That chip makes it harder to create counterfeit cards using stolen payment information, a popular tactic among thieves.

Under the MasterCard rules, ATM operators that don't install EMV-compatible machines by October 2016 will have a greater share of the liability for fraud that occurs on those machines using MasterCard-branded products. Essentially, operators will have to upgrade or pay a much greater share of the losses from fraud.

This has a couple of ramifications for debit card holders, who have a pretty big stake in card security, because consumer protections for debit cards are relatively weak.

Unlike with credit cards, if consumers fail to report debit card fraud fast enough, they face having to pay an increasingly large chunk of fraud losses. Plus, even if you do report debit card fraud with plenty of time to spare, you may still have to deal with significant financial hardship while the matter is resolved because of the way debit cards pull cash directly out of your checking account. So, if EMV adoption can cut down on the fraud, it stands to reason that debit card users will be better off.

The downside for customers is that there will be a huge tab for ATM operators to install the new EMV technology, and that tab will likely be paid by ATM users, in the form of higher fees.

What do you think? Are debit cards in need of a security upgrade?

Follow me on Twitter: @ClaesBell.

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74 Comments
anon2
September 25, 2012 at 8:04 am

for consumers the proverbial 'Can't win for losing'

AnnLavette Lockhart
September 23, 2012 at 5:30 am

"ALERT PEOPLE" THIS IS ONLY LEADING UP THE THE ANTICHRIST which means the mark of the beast which is 666

R28
September 22, 2012 at 11:53 pm

First, let's be clear, chip and PIN (offered by EMV - Europay Mastercard Visa) is NOT the same as RFID. So if you worry about people with RFID readers (a valid concern), rest assured that the technology for chip and pin is different. Since much of the rest of the world is on chip and pin, it only makes sense for the US to do likewise. I have had problems using my card world wide when they have a machine that recognizes chip and pin only, and my card is rejected. This can be especially problematic at gas stations in Europe on a Sunday or after hours when there is no attendant. I have almost run dry of gas before I found a station that would accept my card. I am more than happy to pay a little more in fees to roll out this technology that is already in place throughout the known universe. Once again, the US is behind the power curve. Fraud will diminish dramatically with this approach. It's about time!!

william j postlert
September 22, 2012 at 9:24 pm

I asked Master Card and Visa if I could have my photo on my card like your driver lic. I was told it was to costly. I informed them my friends has one and he is retired from the military. I have on the back of my ATM card and credit cards Photo Required, I observe approx. 20 % of the cashier look at it. Why don,t they install camera at the ATM like the have at the bank?

Betsabe Ocasio
September 22, 2012 at 9:06 pm

Why have they not updated long ago, this can be said that is not new technology, many countries already use it including Mexico and Germany. I feel that US is behind in this aspect and definitely needs the upgrade. If banks are saving money, I am doubtful that they will increase tariffs.

anon2
September 22, 2012 at 8:26 pm

Bertie has the right idea. How about the new security system called C.A.S.H. I understand it is reasonably secure.

Arbie
September 22, 2012 at 7:47 pm

Why isn't MasterCard and Visa subsidizing the cost of the chip cards? My credit union can't keep paying for fraud when merchants are not taking steps to protect me. Merchants keep having these "data" problems because they don't secure my information. My credit union has firewalls, alarms, motion detectors, etc. to protect me and my money but then when I take my card to the merchant he doesn't even lock up his register receipts so my purchases are easily stolen. These merchants hire some fly-by-night "processor" who also has data stolen. If Visa and MasterCard wanted to stop thieves, they need to punish lazy merchants and their processors and not allow them to escape justice when they fail to protect me.

Bertie
September 22, 2012 at 7:37 pm

Considering the costs for fraud are build into the bankcard transactions, we end up paying it one way or another. Seems better to pay for a more secure system (jobs for working folks) rather than pay for malfeasance and the costs to investigate and track down the criminals.

As far as eschewing the used of bank cards, checks, or money itself...well that's a voluminous topic for some other blog, no?

Maggie
September 22, 2012 at 7:20 pm

I am in complete agreement that we need to make it much harder for
bad guys to steal our hard earned money. I think ANON above knows much more about this than I, but it be in everybody's best interest to get really smart people trying to GET AHEAD of the crooks. We have lots of amazing technology and should be using it here! Maybe if we didn't spend so much on fraud we could actually make more that 1.25% on a CD!

anon
September 22, 2012 at 4:42 pm

the problem with the RFID chips is that while they are harder to counterfeit print they are incredibly easy to steal information off of. the info they hold is detailed and the readers are cheap and someone can have your information without even getting close to you to read them. in one small way they are more secure but in others they make the criminals job easier and they get away with much more information...