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Retailers face Oct. 1 deadline to transition to EMV chip cards

September 25, 2015
Dealers should be aware of the Oct. 1 deadline for merchants to switch from equipment that swipes the magnetic strip of credit and debit cards to equipment that reads cards with chip-embedded security. After Oct. 1, those merchants that continue using the older equipment assume liability for all transactions that are found to be fraudulent.
Previous estimates had been as high as 44 percent of merchants meeting the compliance date. But as of July 1, the EMV Migration Forum estimated that only 25 percent of retailers would be compliant on Oct. 1.
In an effort to decrease fraud, MasterCard and Visa set the Oct. 1 deadline for U.S. financial card issuers (e.g., banks, credit unions) to replace magnetic stripe cards with EMV cards and for merchants to begin accepting them. Other card brands followed suit and have also imposed the Oct. 1 deadline. The transition will also make U.S.-issued cards compatible with point-of-sale (POS) systems and automated teller machines in much of the rest of the world. 
Consumer financial card fraud due to data breaches of card information is an ongoing problem in the United States. The majority of breaches are carried out against POS systems, and are facilitated by what many consider to be the weak link in the U.S. retail sales payment process: the continued use of magnetic stripe cards (also referred to as stripe-and-signature cards). These cards are what most U.S. consumers think of when referring to financial cards. 
In much of the rest of the world, cards that provide a much higher level of security for conducting sales transactions are used: EMV cards, named for the coalition of Europay, MasterCard, and Visa (the EMV Coalition or EMVCo) that developed the specifications for the system in the 1990s. EMV cards store card information on an embedded microchip and are more commonly called chip cards. 
With these cards, instead of swiping and signing to make a payment, the cardholder inserts the card into the POS machine, then either enters a personal identification number (PIN) or signs to verify the transaction. 
Fraud is significantly more difficult to carry out against chip cards, but financial institutions in the U.S. have until recently issued stripe cards almost exclusively.