Chip-and-PIN is the biggest upgrade for credit cards since the magnetic stripe, and it can’t be expected to go smoothly or arrive on schedule. Nevertheless, the credit card transition has finally reached the United States in a big way. As of October 1, most retailers had terminals that can accept the new chip-and-PIN cards, or at least they had ordered the new terminals and were waiting for them to be manufactured, delivered, and installed. Banks started to mail the new-style credit cards to all cardholders in September, but the industry has never created and mailed so many cards all at once, so cardholders can expect delays of up to three months. Parts of the transaction processing network can handle the new chip-authorized credit card transactions, and others will be handling that capability in the coming weeks.
It helps that most of the world has already made this transition, and there is no question that the improved security could prevent an abrupt collapse of the transaction processing network someday. Nevertheless, the transition would be going even slower but for the high-profile network intrusions at Home Depot, Target, and other major retailers. Banks and retailers are hesitant to add any new obstacles to the shopping experience, and that is why they are being so cautious with the transition. No one will be happy if there are glitches that cause valid cards to be declined at stores, so the industry is bending over backward to minimize those occurrences. The October 1 deadline might have passed already, but we can expect the extreme caution to continue, at least until the next major transaction security breakdown.
As a cardholder, you mainly need to get used to the new terminals and replace your old cards with the new ones as they arrive. Don’t make the mistake of thinking a magnetic-stripe card will still work just because the expiration date says 2017 or 2018. In my own case, I started the month with only three cards that are EMV-compliant. Banks are prioritizing the cards that are used ten times a month over ones that are used only once or twice. The majority of cards haven’t been used at all in the last three months, and those are likely to be the last to arrive.
The new cards incorporate active ID logic that generates a new unique code for each transaction so that the card number itself doesn’t have to be stored along the way. Network intruders won’t be able to obtain as many card numbers as before, and that fraud opportunity will diminish in scale as more parts of the system are upgraded, eventually disappearing completely around 2019 when we are entering PINs for every credit card transaction. That will close the most glaring gap in transaction security, allowing banks and retailers to focus on other security gaps that also has to be closed.
