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Credit card security has been making headlines coast-to-coast in the wake of Target’s massive data breach, but the entire industry is preparing for a big shift next year as the “swipe-and-sign” payment method waves goodbye.
The Wall Street Journal is reporting that Visa and MasterCard have already prepared a roadmap to the future of credit card payments, and they will no longer involve swiping a card and signing a receipt.
Instead, this long-standing tradition will shuffle off into the financial tar pits in favor of sliding the card into a slot and using a PIN number to approve the charge. That last part should sound familiar to anyone using a debit card, and ironically, the United States is one of the few countries who haven’t yet made the switch.
Beginning October, 2015, the PIN-based card system will launch at retail across the U.S., which currently produces nearly half of the world’s credit card fraud — despite making up roughly 25 percent of all global credit card transactions.
The so-called “chip and PIN” system won’t immediately make swipe-and-sign obsolete — according to Carolyn Balfany of MasterCard, merchants can continue to process charges the old way, but they may be on the hook for any fraudulent transactions.
“Part of the October 2015 deadline in our roadmap is what’s known as the ‘liability shift,’” Balfany explains. “Whenever card fraud happens, we need to determine who is liable for the costs. When the liability shift happens, what will change is that if there is an incidence of card fraud, whichever party has the lesser technology will bear the liability.”
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(Image courtesy of The Wall Street Journal)
