American Express, the remaining EMV holdout of the four major credit card networks, finally got on board with pushing the adoption of chip cards stateside.
The credit card issuer (and network) Friday unveiled its own EMV roadmap that looks similar to the ones released earlier by Visa, MasterCard and Discover. EMV chip cards use a microchip to help authorize a transaction. EMV is an acronym for Europay, MasterCard and Visa, the developers of the standard.
American Express said card processors must support their EMV chip cards, along with contactless and mobile transactions, by April of next year. In October 2015, American Express will shift fraud liability away from retailers that accept the safest EMV technology. (Presumably, retailers who don't accept the technology will be liable for fraud.) Last, the issuer will waive any costs associated with an industry security standard for a retailer if three-quarters of its terminals accept EMV cards.
American Express also will roll out EMV chip cards to cardholders later this year.
The announcement follows similar efforts by Visa, MasterCard and Discover to persuade retailers to accept EMV cards. Visa introduced its initiatives last August, while MasterCard and Discover joined the cause in the first quarter of this year. In the last year, U.S. issuers also have rolled out credit cards with chip technology.
What this means is that the behind-the-scenes processing of credit cards in the U.S. is poised to transform in the next several years into a model that a great majority of the world has adopted already or is adopting.
Advocates of the technology boast about the increased security that it provides. Because transaction data are encrypted uniquely each time the card is used, it's harder for criminals to duplicate a card. Traditional cards with the magnetic strip are easily cloned because the encrypted information never changes.
But, to be honest, this is not a watershed moment for consumers. Sure, expect to get a new fancy card with a chip in it sometime down the road, starting with globetrotters and business travelers -- then the more affluent than the Everyday Guy and Gal.
As for the greater security, it will mean more if debit cards get EMV chip technology since the consumer's liability for fraud losses is much higher. For credit cards, consumers' maximum liability for a lost or stolen card is $50 under federal law.
The other benefit is for frequent overseas travelers. Some Americans may find they can't use their conventional mag-strip card at toll booths, train station kiosks, unmanned gas stations or rural merchants abroad. Often, these situations can be resolved with another form of payment. In a few cases, maybe not.
In the end, it looks as if the U.S. will join much of the world in issuing and accepting EMV chip cards, which looks like it will become the global standard after all.
Do you have a chip card yet? Have you run into problems traveling without one? I'd love to hear your stories.
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