Six months ago there was a sea change in the credit card payment industry. Consumers started to receive new credit cards with a computer chip embedded on their plastic because MasterCard and Visa wanted to squeeze out counterfeit fraud (when someone steals the information off the magnetic strip when you swipe the card and then reproduces it on another card).
These chip cards are the norm across the globe, where spenders dip their card rather than swipe it, because they make counterfeit fraud, which recently accounted for more than a third of all credit card fraud in the U.S., nearly impossible.
But the new credit cards represented only half of the equation: Merchants had to buy and install new terminals that accepted these so-called EMV-enabled cards. MasterCard and Visa decided together that, after last Oct. 1, whichever entity processing a transaction had the lesser technology — that is, either the retailer or the bank — would be responsible in the event of a hack. (Previously only the issuer was responsible.)
Some stores, like Target, were quick to adopt the new machines, but not everyone is up to speed. Concerns over cost, implementation delays, and not wanting to interrupt holiday shopping, have caused merchants to lag behind.
MONEY recently checked in with MasterCard senior vice president Catherine Murchie to get a sense of how the move into chip-based payments is faring for customers and businesses.
Your Cards Have Probably Been Updated
Back on Oct. 1, when the new policy rolled out, nearly half of MasterCard plastic was chip-enabled. That’s finally growing, Murchie says. “As of March 20, almost 70% of MasterCard credit cards have chips on them,” she says. “By the end of 2017, it will be almost 100%.”
If cards from Visa, Discover, and other companies are tracking at the same rate, U.S. chip adoption would actually be on par with Europe by the end of next year — and ahead of adoption rates in Canada and Latin America.
Retailers Still Trail Behind
MasterCard and other industry insiders had expected about 50% of merchants to have an activated terminal by the end of last year. Right now, that’s closer to 30% to 40%, Murchie says.
Part of the problem, she says, was that retailers didn’t want to change the way they accepted payments in the middle of the lucrative holiday shopping season. Since the new, year, though MasterCard has seen more businesses start shifting to the new terminals.
Better Adoption Will Be Good for You
You’re not financially liable for bogus credit card charges, but any fraudulent usage is a hassle — not to mention a potential time suck — and for this new credit card payment system to stop counterfeit fraud, both issuers and merchants have to get on board. “The point of putting EMV in the market, and the point of migration to new terminals, is to reduce counterfeit fraud,” says Murchie. “So you need a certain penetration of terminals and cards in the market before you start to see that benefit take hold.”
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Based on evidence from EMV adoption in other markets, Murchie says, the “tipping point” of fraud reduction is estimated to happen when 60% of cards have EMV chips and 60% of store terminals are chip-enabled. Right now, Murchie says, the balance is closer to 60%/30% — but things are changing quickly, she adds: “It feels like it’s within striking distance.”
Which means that you should be prepared to dip your card more often in the future — and you should be happy you’re doing so.