“What that does is generate a new unique code every time the card is used” says Julianne Pepitone, Senior Tech writer for NBCNEWS.COM
In the past, thieves could make physical copies of the traditional magnetic strip cards. The new chips in the cards make it much more difficult to make illegal copies or purchases. A great idea says Stephanie Erickson from Visa
“They cant create a counterfeit card which is 2/3s of the fraud we see in the system
If a thief tried to use the new chip card’s unique transaction code, it would fail to work.
“it would be worthless, it would be like using an expired password” says Pepitone
But these new chip cards require the consumer to learn something new at the checkout line.
“Consumers at the store will have to forget the swipe and learn how to dip” says Pepitone
That means inserting the chip end of the card in a scanner for several seconds. It takes up to ten seconds longer to process than the old “swipe” method.
It’s a major change for businesses too.
On october first, merchants not card issuers will be responsible for fraudulent transactions if they don’t upgrade their payment terminals.
“These new in-store terminals can be very expensive to handle these chip cards” stated Pepitone
These new checkout terminals can cost up to 1000 dollars per device.
Some experts say the risk of increased liability, combined with slower checkout lines could fuel more use of mobile payment methods.
So if the chip and dip becomes too much hassle, your smartphone might save the day.