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Written by President of MCPS, Art Leiberman

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We have written extensively about the efforts of Visa and MasterCard to implement the chip card method of processing, into
the United States. For those who have missed all that has taken place, here is a very brief review.

In 2012, Visa and MasterCard were determined to install a new credit card technology into the US, which had worked
successfully in Europe. Called “Europay Visa MasterCard”, the new technology imbedded computer chips in new credit and
debit cards.  The object was to eliminate the magnetic strip on these cards, which could be easily read by counterfeiters.
The plan was also to eliminate signatures from the process, and substitute PIN transactions. The reasoning was based on
the fact that, in the US, theft of credit cards had accounted for $800 BILLION in yearly losses to the economy.

Several factors were obviously involved in the process of that. Card-issuing banks would have to distribute new credit and
debit cards to consumers. New terminals, capable of reading the new chip cards, would have to be sold to merchants in the
US. Finally, it was determined that after the complete roll-out of the new system, responsibility for fraudulent transactions at
point of sale would rest with merchants.

An “announcement” was made to all of those involved in 2014, and a “deadline” for the completion of the final installation of
the system was set at October 1st, 2015.  They might as well have made the deadline October 31st, Halloween, since the
entire launch program was a horror.

The launch was nearly a complete failure. Only 22% of the cards were distributed by banks. Only 31% of merchants had
purchased the EMV-ready terminals, and very few processors had prepared the encryption for the new credit card terminals
to function properly. For restaurants, many terminals would not work with tip programs. Some merchants found that their
terminals would not properly read the chip cards, so they had to use the magnetic strips anyway. There were a variety of
problems with the whole system until, finally, a group of merchants ended up suing Visa and MasterCard for the entire
rollout. It was estimated that the EMV liability shift was costing retailors money in chargebacks. From October 2015 to
October 2016, it is estimated that the rollout cost retailers $5.8 billion dollars in chargebacks.

In January 2016, the card companies announced a new target date for the rollout as sometime in 2017. As the year
progressed and pressure was taken off banks, the rollout, however, slowed down. Although it does appear that most credit
cards will carry the chips by 2017, debit cards are not faring too well.

So now the deadline has been moved once again, and the card companies seem to insist that this is the REAL deadline for
the total installation of the EMV system. From that date, all new credit and debit cards will ONLY contain the chips, and not
the magnetic strips. All transactions will be chips and PIN, and no signatures will be required. Moreover, it is anticipated that
there will be a huge decrease in point-of-sale fraud, from credit card transactions.

The new date? 2020! That date might finally be a reality. If you’ve read my previous articles, one of which was written in
August of 2015, before the original deadline, I predicted that the eventual rollout would be completed in 2020. I guess I was
at the other end of the road, waiting for the can to come to me.