CITY, Mo. ó American shoppers, adept at swiping the
stripe, soon will learn to dip the chip in malls and
strip centers across the land.
talking about credit cards, specifically high-tech ones
with microchips inside to make plastic money more
secure. Chip cards are everywhere overseas and finally
emerging here in response to massive credit card data
breaches such as the one at Target in 2013.
to find chip cards in your wallet by year-end as card
issuers roll them out, if oneís not there already.
Chip cards have a small gold or silver rectangle on the
front of the card just above the first four digits of
the cardís number. Itís not the hologram of a dove
found on many stripe cards.
will help if someone shows you how to use them. Shoppers
shouldnít slide a chip card through the machine at
checkout lines. They should insert, or dip, the chip
card into a slot ó and let it sit.
you put it in there, it kind of clicks. You can feel
it," said Bobbie Kuhns, who used her chip card last
recently at a Wal-Mart grocery store.
of us would be dipping chip cards already if this
seemingly simple change werenít so disruptive, and it
certainly creates potential pitfalls such as leaving
your card behind.
however, say retraining consumers will be worth it. Chip
cards are nearly impossible to counterfeit even with
stolen account information, in contrast to normal credit
got a big wake-up call with Target, and everybody in the
industry is very keen on fixing this problem," said
Carl Bradbury, director of consumer cards at Commerce
if a chip card is lost or stolen, a second security
measure can render it useless. Few American-issued
cards, however, are set to deploy this second safety
step, and that has some security advocates howling.
just not taking advantage of the technology given to
us," said John MacAllister, a semi-retired
consultant to the payments industry.
chains, notably Wal-Mart, are leading the retail
industry toward chip cards.
of Nov. 1 last year, every register at all 46,000 U.S.
Wal-Mart and Samís Club stores accepted chip credit
cards. And every Wal-Mart and Samís Club brand credit
card has a chip in it.
has set the goal of having chips in all its
Target-branded RED cards this year.
smaller retailers are ready now.
Jones Shoes in Kansas City has had chip card readers at
its registers for more than a month.
Sharon Breshears admits she crumpled under the pressure
of repeated calls from the company that sells the
readers. Each day, a few customers with chip cards come
into the store.
few of them have used it as a chip card," Breshears
because credit card makers are still adding the magnetic
stripe on the back of chip cards. It allows one card to
work at merchants ready to handle chip-cards as well as
those still stuck on swiping.
now, Breshears shows customers how to use the new kind
of card. Processing the sale takes a couple of minutes,
supposedly no longer than processing a card transaction
by swiping a normal card.
true unless the customer inserts the card and then pulls
it out right away, as heís supposed to do with stripe
cards at many gas pumps and automatic teller machines.
Chip credit cards are different; they need to stay
inserted until the sale is complete.
is going to take a long time to train the humans,"
said MacAllister, the consultant.
humans, MacAllister means clerk and consumer alike. His
own run-in with a chip card came last September.
shopper ahead of him at a self-check-out line swiped a
chip card, and the register indicated the card needed to
be inserted. He said the machine also wouldnít read
the chip, and the store clerk didnít know what to
was no way she could get out," MacAllister said of
the shopper. "The line started getting longer and
have pretty much figured out the old credit cards that
just swipe. And theyíre creating financial mayhem.
report from the Federal Reserve Bank of Kansas City last
fall put the total for credit and debit card fraud at
have lots of ways to steal account information, and itís
relatively easy to put the coded information onto the
stripe of a blank card or re-code an existing card with
the new information.
cards are vulnerable because every time you swipe one it
gives up key information crooks need to do their dirty
work. Hackers have found many ways to intercept or steal
this information, collecting data on millions of cards
and card holders.
example, Kansas City-area police are seeking help
identifying two men suspected of putting a card reader
inside a bankís ATM, hoping to copy the stripeís
information every time customers withdrew cash.
make credit cards virtually impossible to
cards do more than spew the standard account information
that stripes deliver. The chip also generates and sends
out a "cryptogram" that changes with each sale
and is needed to complete the transaction with the bank
that issued the card.
counterfeiters holding vital account information for a
chip card would have no chip, no cryptogram and no
chance for fraud.
far, the bad guys havenít been able to crack this, and
in Europe theyíve been going at it for a couple of
decades," Commerceís Bradbury said.
still have a reason to steal account information on chip
cards because so many merchants still donít have chip
card readers and allow shoppers to swipe the cardís
stripe rather than dip its chip.
will want chip readers come October.
when a new rule imposed by credit card companies Visa
and MasterCard hits. It has to do with whoís liable
when thieves get away with fraudulent transactions using
a counterfeit card.
has declared that banks that fail to get chips into
customersí cards by Oct. 1 will be on the hook for
fraudulent transactions that involve using a counterfeit
stripe card. Similarly, merchants who let customers
swipe the stripe of a chip card after Oct. 1 will be
stuck for those transactions that turn out to be
banks generally are on the hook for fraud when
counterfeit cards are presented to merchants and
merchants generally are on the hook for online credit
card fraud, which means no card is physically presented
to the merchant.
not all consumers will have chip cards in hand by the
Bank, for example, has no chips to offer new card
customers today and expects to need all of 2015 to
complete its switch.
doing it, and the issuers have built queue lines,"
said Mike Hagedorn, president and chief executive of UMB
and smaller bank card issuers are behind the biggest
generally have waited to switch because itís costly. A
new card means plastic and mailing costs, plus the chips
add to the expense.
switch also has been delayed because merchants and
bankers know their customers donít know how to use
chip cards yet.
lot of retailers are concerned that this is going to be
too much of a learning curve for customers. Theyíre
putting this off as long as possible," said Brian
Krebs, whose blog, KrebsonSecurity.com, tracks
computer and Internet security. "And none of the
banks want to be the hardest card to use in the
chip is only half the security. And many say itís not
for example, consumers who dip the chip typically enter
a four-digit number to confirm the charge. This PIN, or
personal identification number, adds a second layer of
lost or stolen card becomes useless because the finder
or thief wonít have the PIN to enter.
alternative is to handle chip card transactions the same
way as regular card transactions, and require consumers
to verify the transaction by signing their names.
are supposed to compare that to the signature on the
back of the card, and ask for some identification. Of
course, many donít.
chip card readers now ask for a signature to verify the
transaction, spokesman Randy Hargrove said. This isnít
the giant retailerís choice.
said the bank that issues Wal-Mart and Samís credit
cards isnít ready to handle PIN verification. He said
PINs are coming to Wal-Mart sometime this year.
just a more secure transaction," Hargrove said.
has said itís going with PINs for its chip
banks are going with chip-and-sign cards. The concern
many have is that card users wonít remember their PINs.
This claim seems plausible once wallets fill with PIN
cards and shoppers have to remember multiple PINs and
which go with which card.
issuers are taking a chip-first, PIN-later approach to
ease shoppersí transition and keep them focused on one
change at at time.
a choice, consumers "absolutely" should look
for both a chip and PIN with their credit cards, said
Odysseas Papadimitriou, founder of CardHub.com, which
compares features of cards.
most importantly you want the merchants to start
accepting them," he said. "If you have a chip
card and youíre swiping it everywhere it doesnít
help at all."