Visa, MasterCard To End Swipe-And-Sign By 2015

Goodbye credit card signatures and hello PIN numbers. In a move that could better protect consumers from massive security breaches, major credit card companies are looking to implement a chip-and-PIN system instead of the tired and true swipe-and-sign method used across the country.

Both MasterCard and Visa have outlined a planned shift to the new EMV system and set a October 2015 deadline to begin using the system, The Wall Street Journal reports.

Under the EMV system consumers will use a smartcard embedded with microchip and provide their PIN to complete a transaction. The chips make reproducing a card difficult for criminals. Even if the credit card information is gathered, without the chip the card is useless.

Another significant piece of the new system is creating a shift of liability, say Carolyn Balfany, MaterCard’s expert on the new EMV system.

Whenever card fraud happens, credit card companies must determine who is liable for the costs. When the new system is in place, if an incident of fraud occurs the party with lesser technology will bear the liability, Balfany says.

That means if a merchant is using the old swipe-and-sign system they are liable for the fraudulent charges if the customer has a chip card. If the merchant has the proper chip-and-PIN system but the bank hasn’t issued a new chip-and-PIN card to the customer, then the bank is liable.

Implementation of the new system will likely bring a sense of relief to consumers and business owners following a number of high-profile credit card system hacks at Target, Neiman Marcus and Michaels.

Earlier this week, Target and Neiman Marcus executives told a Senate Judiciary Committee that once the new system is in place less hacks are likely to occur.

That seemed to be the case for other major markets that transitioned to the new system several years ago.

So, why did it take so long for the changes to come to the United States? Balfany says a number of factors prevent the U.S. from making the change, including requirements in the Durbin amendment and need to determine costs for businesses.

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  1. SingleMaltGeek says:

    STOP SAYING “PIN NUMBER”!!!

    Sorry, had to get that out of my system.

    • APK1080 says:

      What else would you use at the ATM machine?

      • SingleMaltGeek says:

        I see what you did there. :D

        Actually, I heard someone say recently that even “Automated Teller Machine” was redundant, as an automated teller would necessarily be a machine. (Or, more precisely, a mechanical teller would have to be automated.)

    • StevenB says:

      LOL, I get it. PIN = Personal Identification Number to say PIN Number is saying Personal Identification Number Number. LOL

      PIN being an acronym you should just say PIN.

  2. Saber says:

    Dear sweet lord. I’m telling you right now that the first ones who are going to be up in arms about this are the banks who are well-off in terms of customers (have credit cards) but don’t want to apply this to the debit card system. With a competant strategy, it only takes about $1.50 to make a card/ship it out (including Post Office fees). The machine to add the chip costs roughly about $20k for a basic 500-1000 day card operation, and I’m willing to bet that the larger banks are going to pass that onto their poor clients.

    Who I feel actually worst for are the Credit Unions and the Mom & Pop stores. What’d be nice is if there was some kind of trade commission/federal incentive or rebate program for these places so that they could upgrade and not feel the pinch as much.

  3. SpeakBob says:

    I’m wondering how this will effect the increasing number of small places that are currently using Square and other similar products on their Phones/Tablets? Will there be a Square version of this coming out or will Square customers be some of those left holding the bag since they are stuck with the swipe only method? The reason I’m wondering is one of my friends is a merchant at craft shows, reenactment sites, etc on weekends, in other words a small time business man taking in less than $500 a week on average. I would hate to see him and others like him taking the burden of loss.

  4. trustnot says:

    Is this another easily readable RFID?

  5. pigscanfly says:

    Something called “new EMV system” is mentioned 3 times in the first four paragraphs, but never explained. Maybe “Empty My Vault”?