We could start to see “smart cards” — credit cards embedded with a PIN-encoded chip instead of just a magnetic strip — take hold in America next year due to a big move by Visa. They are offering some very enticing financial incentives to stores to get them to install point of sale terminals that can read smart cards.
If the majority of their terminals take smart cards, the store will no longer have to pay each year to have their payment system security audited every year, Visa announced. That’s the carrot.
The stick is that if a customer presents a smart card and the store doesn’t have a smart card reader and the backup magnetic strip on the card has to be used, and that card turns out to be fraudulent, then the store eats the loss when the transaction gets disputed. Before, the payment processor would pay for it.
Those are some pretty powerful nudges. Expect to see smart cards starting to spreading in the US next year.