Credit card security deadline

(NBC NEWS) You may have received a new credit or debit card in the mail with a microchip on the front.

If you’re not sure what the chip is all about – you’re not alone.

One survey showed that about 75% didn’t understand why they were being sent the new chip-embedded cards.

It’s all part of a nationwide shift in the way we pay, with the goal of offering added security to card users. But it doesn’t come without tradeoffs.

The new chips use EMV (which stands for Europay, MasterCard and Visa) technology, something that has been around since the mid-90s. While it is newly-adopted technology for America, much of Europe and the UK already use this system.

“In countries that have moved to chip technology, two years after the liability shift date, they see their counterfeit go down 60, 70 percent or more,” said Stephanie Erickson, Head of Authentication Product Integration for Visa.

Erickson says thieves could easily make physical copies of the traditional magnetic strip cards, but the new chips make that much more difficult.

“They can’t create a counterfeit card which is two-thirds of the fraud we see in the system,” said Erickson.

The chip creates a unique transaction code each time the card is used.

“If someone acquired that code and tried to used it, it would be worthless,” said Julianne Pepitone, Senior Tech Writer for

But the new chip cards require a learning curve at the checkout line.

“Consumers at the store will have to forget the swipe and learn how to dip,” said Pepitone.

Shoppers “dip” the card by inserting the chip end for several seconds, then it takes up to 10 seconds longer to process the transaction than the old “swipe” method.

It’s a major change for businesses too.

On October 1st, merchants – not card issuers – will be responsible for fraudulent transactions if they don’t upgrade their payment terminals.

“These new in-store terminals can be very expensive to handle these chip cards,” said Pepitone.

They can cost between $200 – $1000 per device, which can add up quickly, especially for small business owners.

Some experts say the risk of increased liability, combined with slower checkout lines could fuel more use of mobile payment methods.

So if the chip and dip becomes too much trouble, your smartphone might save the day.

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