Over the last couple of years, you may have noticed that your renewed credit cards have come equipped with a small microchip as well as the usual magnetized strip. This chip technology, known as EMV, has been implemented across the United States as a way to combat credit card fraud; the chips are meant to make credit card transactions more secure than ever before. Plus, it’s now smoother and easier than ever to make a purchase with EMV – with no signature required, all you need to do is enter a 4-digit PIN, which adds yet another security level to credit card purchases.
But is EMV all it’s cracked up to be? It’s been touted as a breakthrough solution to fraud and theft, yet there still could be holes in the system. There’s also the fact that some retailers have yet to adopt technology capable of accepting cards with EMV. The switch may not have gone smoothly, but hopes are high that EMV could help crack down on credit card fraud – unless there are new vulnerabilities to exploit.
A Rocky Yet Necessary Transition
Credit card fraud and unauthorized transactions are a huge concern, especially given that these illegal practices cost people billions of dollars in losses every year. Naturally, finding a way to cut down on these transactions is hugely important for retailers in the U.S., and EMV technology looks to be the best step towards fighting off hacks and theft.
There are a multitude of security benefits when it comes to making the transition to EMV; an article at TIME comments, “Unlike magnetic strips, which even incompetent fraudsters can hack using cheap tools, EMV chips come with fairly sophisticated built-in security defenses. Among other things, they prevent magnetic strip skimming devices from stealing your credit card info.” The article also mentions that the 4-digit PIN is a better security measure than a signature, since retailers aren’t always reliable when it comes to spotting forged signatures.
But it hasn’t been an easy switch; in fact, some retailers were reportedly dragging their heels when it came to upgrading their POS. “While larger retailers are taking the necessary steps to upgrade their POS terminals to EMV, U.S. small merchants remain far behind,” says an article at Entrepreneur. “According to a recent survey we conducted, more than one third of U.S. small merchants are unsure or do not plan to upgrade to EMV. They cite cost as the main reason.” Unless small businesses get on board, the risk of credit card fraud could still be present.
The Impact on Security
The entire move to EMV was necessary for security reasons – but although credit card fraud may be a little more difficult now, it isn’t impossible. There’s the argument that putting too much reliance on one specific feature may leave the window open to other flaws: “We can’t be surprised when, a year or two into this EMV transition and the inevitable breach takes place, consumer and media reaction is sharp and swift,” warns a 2015 blog post at PaymentsViews. “With EMV as the single security step visible at the cardholder level, disappointment and disillusionment is equally inevitable.”
Also, as mentioned earlier, some smaller retailers have been reluctant to change their POS terminals to accept EMV. This may end up hurting them more than their customers in the end, because if transaction fraud takes place in their non-EMV equipped store, then they – the retailers – can be held responsible.
“Come October 2015, those who are without EMV-enabled systems may be liable for certain types of fraudulent credit card transactions at their locations,” says Entrepreneur. “That means small merchants who don’t have terminals that can accept the new, more secure cards, will leave their valued customers more vulnerable and their businesses potentially liable for fraudulent activity.”
Yet it’s not all negativity – the move towards EMV is proof of credit card companies proactively defending against theft and fraud, and for consumers, having an extra layer of security is reassuring. The onus now is on merchants to go through with system upgrades, especially with the threat of responsibility if fraud takes place.
Vigilance is the Best Security
Placing a microchip in credit cards and switching from a signature to a PIN are positive steps forward to combat security flaws in transactions. However, putting too much confidence in this one change could prove to be a flaw itself, not to mention the fact that some merchants remain slow in adopting the new POS terminals. It’s still up to consumers to be vigilant with their credit card information – and for retailers to provide up-to-date technology.
Do you carry a credit card with EMV? Do you feel like your transactions are more secure? Tell us in the comments.