Credit and debit cards are changing soon to include a data chip instead of a magnetic strip. Patrick Dix with Shazam, a non-profit electronic funds transfer provider, says the switch will dramatically reduce point of sale fraud.
“You’re holding a little computer in your hand when you have one of those cards in your hand. Every time you stick it into the machine, in order to purchase something, that is going to be a unique transaction. You can not counterfeit that card,” said Dix. “We believe that it’s a great tool to help stop fraud, but it’s only one tool. The other thing that we know, because we watched it happen in Europe, is that much of the fraud is going to migrate online.”
Starting October 1, if the retailer doesn’t have the appropriate terminal for the new card, then the liability shifts to the retailer. Dix said retailers should assess the business’s fraud risk first.
“We believe that merchants need to make sure that it makes sense for them to switch over right now because it is going to be an investment for them in security,” said Dix.
He said the cost of such a terminal varies from about $250-$500 each.
The U.S. is the last major market that has not implemented the security standard, but Dix says the U.S. has many more banks and retailers.