For vendors and merchants across the country, Thursday marked a transition for how credit and debit transactions are handled in the U.S. The move comes as banks, credit agencies and other stakeholders push for chip-based credit cards.

For vendors and merchants across the country, Thursday marked a transition for how credit and debit transactions are handled in the U.S. The move comes as banks, credit agencies and other stakeholders push for chip-based credit cards.


This EMV standard — named after its creators, Europay, MasterCard and Visa — is expected to bring more security to transactions made via credit or debit cards. Starting on Oct. 1, vendors who have not updated their networks and equipment to allow for the new cards will be held liable for fraudulent charges.


"There is a lot of confusion going around about these new cards" said David Shipper, representing Landmark Bank. "I think the main point to take from this is that customers have always been protected." Shipper said this change in standard works as a protection for vendors and banks.


These cards look like traditional credit cards except with a microchip embedded in the end of the card. Instead of being swiped, the card can be inserted into the terminal. At the time of purchase, a unique code will be transmitted from the chip to validate the purchase. Many of the cards will still have a magnetic strip to allow them to be swiped, if need be.


Shipper said the transactions may take slightly longer than a traditional credit card purchase, but are significantly more secure. Unlike magnetic strips which are vulnerable to replication and fraud, Shipper said it is nearly impossible to copy the signal made by the chip.


Shipper said Landmark Bank is expected to roll out EMV debit cards and a new EMV credit card product starting in 2016.


This is she second step in the process of adopting the new cards as the standard for credit purchases. In 2013, Maestro, an international debit card service owned by MasterCard, shifted liability for international chip cards used in the U.S. Liability for MasterCard ATMs is expected to shift in 2016. Pay-at-pump gas stations and Visa and American Express ATMs are scheduled to transfer liability in 2017.


"The October 2015 liability shift was enacted to encourage adoption of the greater levels of security offered by chip cards," Carolyn Belfany, U.S. product delivery group head for MasterCard Worldwide said. "A chip card transaction offers advanced security in-store and at the ATM by making every transaction unique."


Belfany said the move comes as counterfeit-card fraud is growing in the U.S. In 2012, fraud cost banks $3.4 billion and merchants $1.9 billion, she said, citing the Nilson Report.


"(The U.S.) accounts for 25 percent of the world’s card transactions and 47 percent of the world’s counterfeit card fraud," she said.


In a press release issued Wednesday, MasterCard said the Payments Security Task Force — a group of eight financing organizations that make up 50 percent of consumer credit and debit cards — has issued new cards to 30 percent of its customers. By the end of the year, that is expected to grow to 60 percent, and 98 percent by the end of 2017.


Among the local merchants who have made the transition to the new standard is Momo’s Donuts in Sherman. Owner Mario Guerrero said he recently purchased the equipment needed to bring the shop into compliance.


"Even though these new credit card rules place an unwanted liability on small businesses like ours, I agree as a consumer that this is a good move to ensure our credit card security," he said, noting he has had his identity stolen in the past. "I urge consumers to be patient with small businesses as they rush to be EMV compliant over the next few weeks."


Despite the increases in security, Shipper said this move is not a cure-all for credit card fraud. The transition to chipped credit cards is meant to alleviate "card-present" fraud where a physical card is used, he said. However, this offers to protect for "card-absent" fraud, where the card is not needed for the fraud to occur. This includes online transactions, he said.