Got Your Chips?

By October 1, credit card holders and merchants were supposed to have switched to EVM chip-enabled credit cards and chip card readers. It seems that many consumers and businesses have blown that deadline.

If you haven't received a new credit card with chip technology, don't worry. More than 200 million new chip cards have been sent to cardholders, according to Your old card with the magnetic "swipe strip" will still work when you need to make a charge. But missing the deadline may be more consequential to merchants, who now have new fraud liability.

Merchants who failed to upgrade their card readers to chip technology could now be liable for losses from fraud. Previously, the issuing banks had been solely responsible for fraudulent use of credit cards.

EVM technology (EVM stands for Europay, VISA and Mastercard -- the consortium that standardized the chip technology) has been in use in Europe for a decade and in Canada for the past two years. The chips have a good record of lowering fraud losses.

The move to EVM chip technology has been spurred by the major banks and has been accepted by major retailers, who understand the new potential liability. But many smaller merchants have either not understood the new liability or have been unwilling to spend the money on new card readers.

The chip is a more complicated technology that foils "swipe fraud," in which information from the magnetic strip on an older card is easily stolen. The chips provide a unique code for each transaction, so the data changes each time the card is used. Of course, the chip card won't prevent fraudulent use when someone is ordering over the phone or the Internet using the card. But it's estimated that three-quarters of the more than $3.8 billion in annual fraud losses at retail outlets could be avoided if chip cards were in use.

Using Your Chip Card

Your new card looks almost the same, but you'll notice the difference because you insert your chip card into the merchant's reading device, and it stays in the device until the transaction is completed. For example, if you're at a restaurant your server will bring one of the new devices to the table, where you will manually insert the tip as well as your PIN to complete the transaction. Then you remove your card, and the server can hand you a printed receipt.

Be on the lookout for your new card in the mail. Switch over to using it immediately, as it will work in all the older swipe readers as well as the new chip readers. And be sure to destroy the old card. But remember that the chip isn't the total answer to credit card fraud. Keep these tips in mind:

1. Check your card balance and transactions online every week -- or more frequently if you use the card often. Even though you're 100 percent protected against fraud, it helps to discover it quickly -- especially now that banks will be pursuing the merchants for reimbursement!

2. Use a separate card for online purchases. That way if your information is stolen you will be able to restore your saved credit card information at websites more easily when you get a new card.

3. Keep a separate list at home of all your credit cards, the account numbers and the toll-free numbers to call if a card is stolen. (You won't be able to access the toll-free number on the back of the card if your wallet is stolen!)

Credit card fraud is costly, but not only to the banks and now the merchants. It raises the price of consumer goods for all of us. So instead of being annoyed at the need to change credit cards, we should applaud the industry for offering more protections. We will all be better off. And that's The Savage Truth.