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Credit card system in United States to shift away from magnetic strip

updated 11:05 pm EDT, Thu May 8, 2014

Smart chip cards as found in Europe making way to customers in next 18 months

Credit cards in the United States will begin transitioning away from the aging technology of magnetic swipe strips in the next 18 months. Future cards will have embedded smart chips containing card data as well as a magnetic strip, much like the cards that are used in Europe and Canada. The system currently in place, that relies wholly on magnetic strips, is still used in Mongolia, parts of the Middle East, and Papua New Guinea.

Bloomberg reports that companies such as MasterCard and Visa have set internal deadlines for the magnetic strip to chip card upgrades to begin in October 2015. The changeover will mean that retailers nationwide will also have to change terminal systems and readers to accommodate the over 1.2 billion debt and credit cards in the country. Vendors that don't make the switch will be responsible for fraud in face-to-face transactions, in contrast to card issuers holding the liability now.

Nick Holland of Javelin Strategy & Research said that the upgrades can take as long as three years, according to bank and card issuers with "a third of cards upgraded per year." Users of high net worth and international travelers will be the first priority, with people lower on the financial totem pole being addressed later in the process.

A problem still remains with the system, even though it is a fundamental upgrade that has been needed for years. Instead of moving to a chip-and-pin authentication system as used elsewhere, the cards in the US will go to chip-and-signature, leaving one relic of the former system in place.

by MacNN Staff



  1. elroth

    Junior Member

    Joined: 07-05-06

    "Users of high net worth and international travelers will be the first priority, with people lower on the financial totem pole being addressed later in the process."

    Good - it'll be 10 years before they get to me.

  1. Ω

    Mac Elite

    Joined: 11-18-03

    Does this mean I can finally get rid of the zip-zap?

  1. jreades

    Junior Member

    Joined: 02-02-99

    "... move to chip and signature..." Wait, what??? So the least secure part of the system (when was the last time anyone checked a signature or asked for ID) will continue to be used is preference to PINs?

  1. Makosuke

    Forum Regular

    Joined: 08-06-01

    @jreades: "when was the last time anyone checked a signature or asked for ID"

    The signature instead of PIN is ridiculous, since it's just recording legal consent rather than any form of security, but on the checking ID a lot of the major retailers where I shop ask for ID as a matter of routine. Supermarkets and such don't, but Staples always does (big ticket items, presumably), Bed Bath and Beyond does, and even pharmacy CVS does sometimes at random (I think the registers flag some percentage of customers for the clerk to check, or it could be a dollar limit).

    Of course, most places don't even bother with the signature for amounts under $20 or $30 these days.

  1. Medazinol

    Fresh-Faced Recruit

    Joined: 10-03-99

    Like in Europe? How about just north in Canada? We've had them for 4 years now.

  1. mac_in_tosh

    Forum Regular

    Joined: 12-14-11

    The so-called signature that I input to those little machines is rarely even recognizable by me, because it jumps around so much.

  1. daqman

    Junior Member

    Joined: 09-15-00

    For years I tried my best to sign my name in the little box on the screen but it has been such a joke that about a year ago I just gave up and squiggle the pen up and down. Even then nobody bats an eyelid. I already have a chip and pin VISA from my credit union but it has two issues, first nobody has chip and pin readers, second I can't chose my own pin and I have trouble remembering the one they sent me. No, I'm not totally losing it (yet) but it's pretty close to another pin that I memorized and I always mix them up.

    In my opinion it should be chip and pin, something you know and something you have, with selecting your own pin allowed.

  1. daqman

    Junior Member

    Joined: 09-15-00

    Oh, and how will this work online? If you have to type in the card number and the stupid "secret code" that I've now typed into a hundred websites then it doesn't help at all. Maybe someone from a "chip and pin only" country can comment?

    The only two instances of credit card fraud I have ever had have been when someone got my name and card number off a legit online order that I made and then used it to make their own online orders using all my correct billing info, even my cellphone number, but a different shipping address. On the latest one I was alerted by a diligent store who called the cell number to confirm the order since the shipping and billing addresses didn't match.

    One of the other companies not only shipped the goods but, to add insult to injury, now send me junk mail because my billing address was used on the order.
    Oh, and we figured out who the culprit was fairly easily since it was a new cellphone and I only ever associated that card number with that phone number once (online replacement tool parts company).

  1. wrenchy

    Forum Regular

    Joined: 11-03-09

    Originally Posted by NewsPosterView Post

    Users of high net worth and international travelers will be the first priority, with people lower on the financial totem pole being addressed later in the process.

    Umm excuse me, that's not what the original article states.

    What’s in Your Wallet? 1960s Technology Desperate for an Upgrade  - Bloomberg

    Making things up now macnn eDitards?

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