“Fraud will always find the weakest link. “Like Willie Sutton says, bank robbers go where the money is,” Levitin said, referring to the prolific criminal. Nearly half of all card losses in 2012 occurred in the U.S., according to the trade journal the Nilson Report. card issuers are finally making the move. But in the wake of large-scale data breaches and rising rates of card fraud-in 2014, counterfeit, lost, or stolen card costs reached $3.8 billion-U.S. There were no regulations in place mandating swift change, which led to an elaborate game of finger-pointing between merchants and banks. “Everyone else had to upgrade, while our card system networks were making money.”įor a long time, in other words, the United States’ payment problems just weren’t bad enough to warrant such an upgrade. “The reason we’ve lagged behind is because we were ahead,” Georgetown law professor Adam Levitin told The New Republic. New chip cards can cost $4 each, compared to less than $0.50 for magnetic stripe cards, and new card readers can cost hundreds of dollars, compared with less than $100 for the old version.
#CREDIT CARD CHIP READER LAW UPGRADE#
And with more than 1.2 billion cards on the market and 12 million POS terminals, the complexity and cost of an upgrade is considerable- by some estimates, around $4 billion. market is larger than all of Europe’s payments markets combined. The idea was to eliminate any risk at the POS system. The United States, on the other hand, has always had “ real-time transactions,” meaning that merchants immediately send off credit card information to the issuer for verification.
#CREDIT CARD CHIP READER LAW UPDATE#
It wasn’t necessary to connect with the card-issuing bank, so an update of the telecommunications system wasn’t necessary, either. The POS would read the chip data to authorize the purchase. The introduction of EMV thwarted such attacks, because now cardholders had to enter PINs, which were linked to their individual cards. This meant that there was no instant, online mechanism to authorize payments, thereby giving criminals ample opportunity to commit lost or stolen card fraud at the POS level. Before the switch, merchants in Europe used batch processing and stored card transactions at the point-of-sale terminal, mostly because the telecommunications infrastructure was too slow to pass on information in real-time. Of course, those countries’ need for EMV was acute. EMV became widely available in the early 2000s, and that’s when many European countries started using it. But now that it’s finally investing in-and rolling out-the necessary technology, it might be a little beside the point in confronting today’s biggest fraud risks.ĭeveloped in 1994, EMV-which stands for Europay, MasterCard, and Visa-became the global standard for cards equipped with computer chips and the technology used to authenticate chip-card transactions. For nearly 15 years, the United States was the lone major economic holdout in making the switch from magnetic stripe systems to chip cards.
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