In a recent report by Wall Street Journal, October 15, 2015 has been set as the deadline by VISA and Mastercard to switch to a more secure way of authorizing credit card transactions in which customers will enter a personal identification number (PIN) at checkout instead of signing a receipt.
The U.S. is the last major market to still use the old-fashioned signature system, and it’s a big reason why almost half the world’s credit card fraud happens in America, despite the country being home to about a quarter of all credit card transactions.
Wall Street Journal reports that “The recent large-scale theft of credit card data from retailers including Target and Neiman Marcus brought the issue more mainstream attention, leading to a Senate Judiciary Committee hearing this week. Executives told the senators that once the country transitions to the new system — which includes credit cards embedded with a microchip containing security data — these kind of hacking attacks will be much more difficult to pull off.”
This change isn’t expected to happen all at once. According to Verge, Banks must issue cards with microprocessors and merchants need the right equipment to process the so-called “chip and PIN transactions,” which is likely to happen gradually. But Visa, American Express, and MasterCard have announced that banks and merchants that have not adopted the technology for face-to-face transactions by October 2015 will be liable for fraudulent purchases. That’s a strong incentive to get up to date. The new system will also prepare merchants and banks to transition to contactless payments in the near future.
