Credit card firms MasterCard and Visa plan to have most customers on the more secure chip and pin cards by October, 2015, according to a report in the Wall Street Journal. The move comes in the wake of a massive heist of account information for tens of millions of credit card holders from the systems of U.S. retailers including Target, Neiman Marcus and Michaels Stores.
In an interview with MasterCard’s Carolyn Balfany, the Journal notes that company has set October, 2015 as the date for a “liability shift” – a change in policy that will hold the party in a fraudulent transaction liable for losses due to that transaction. The goal, said Balfany, is to try to encourage merchants and card issuers (banks) to move to the more secure chip and pin technology in concert.
Visa said that it also will institute a liability shift in October 2015. However, the shift to more secure cards will likely start much earlier. Visa is requiring all ATMs that accept its cards to be EMV compliant by April of next year.
According to the article in the Wall Street Journal, the liability shift means that the party that uses the less-advanced technology in the transaction will be held liable if the transaction turns out to be fraudulent. So, if the merchant is still using the old system and processes a transaction with a swipe and signature, the merchant would be liable. If the merchant has a new terminal to accept the chip and PIN cards, but the the bank hasn't issued a chip and PIN card to the customer, the bank would would be liable.
And that means the banks are going to be pretty firm about replacing magnetic stripe cards with chip and PIN cards.