October 1st, 2015.
Today, retailers are responsible for credit card fraud if they are not using credit card terminals that support chip credit cards.
While there is a learning curve for both merchants and users, the curve is pretty small and it will reduce credit card fraud at retail stores.
Gas Stations and ATMs still have two more years to convert and online purchases are not affected.
In Europe, they discovered that online credit card fraud went through the roof when they went to chip cards at retail – because retail fraud is so much harder.
What needs to happen next is to completely remove the mag stripe from the cards – but that can’t happen until the 2017 deadline passes for gas stations and ATMs.
Customers should use chip transactions whenever possible and if a retailer can’t process a chip transaction, ask the retailer why they are not since you are concerned about your credit card security. Make it seem like bad customer service to not take chip cards.
I have seen that at least some ATMs have already been converted to using the chip cards.
From a user standpoint, there are only two differences. One, you insert the card into the terminal and leave it there until the transaction is complete. The other is, at least right now, the transaction takes much longer – around 20 seconds. I do not know if that will speed up over time. In reality, the transaction is no slower than it was before but YOU didn’t see that time when you swiped your card.
In any case, the chip is the way it is going to be for now.
Of course, if you use Apple pay or Android pay, that is an alternative.
For merchants, if they are NOT using chip enabled terminals, they get to eat the entire cost of a fraudulent transaction. And the credit card companies want to make that sting. Not only will they have to pay for the transaction, but likely also the investigation, the customer communication, the reconciliation, etc. It is unclear how much that will be, but expect it to be large to encourage retailers to move to the new system.
Here is a link to a graphic that shows when the merchant is liable and when the card brand is liable – it is complicated.