U.S. credit card holders just got one step closer to using cards with chips instead of magnetic stripes. MasterCard has announced a plan to transition to the “chip and PIN” technology that is already the norm in Europe.
By the end of April 2013, MasterCard plans to have replaced its existing magnetic stripe infrastructure with one ready for chip-based technology. That means every credit card will have a small silicon chip embedded in it, much like a cell phone’s SIM card.
Instead of swiping, customers can just wave the cards at the reader to make purchases.
Visa made a similar announcement in August and said, by April 1, 2013, it would require firms that handle credit card transactions for retailers to accept merchant chip transactions.
“We’re moving toward a world beyond plastic, where consumers will shop and pay in a way that best fits their needs and lifestyles with a simple tap, click or touch in-store, online or on a mobile device,” said Chris McWilton, president of U.S. markets for MasterCard, in a statement.
Europeans and consumers in other countries have been using the 12-year-old Europay, MasterCard and Visa (EMV) technology for years, but it has been slow to come to the U.S. Retailers haven’t wanted to spend the considerable cash on new payment systems until card companies adopt the new technology, and card companies haven’t wanted to use the chip cards until merchants agreed to accept them.
MasterCard’s plans include incentives for merchants, integrated customer loyalty programs and support for dynamic authentication technologies. The dynamic authorization is a huge step in eliminating fraud because each transaction is unique and uses encrypted information, whereas a signature can easily be faked repeatedly. The chips are also more difficult to clone than magnetic stripes.
Randy Vanderhoof, executive director of the Smart Card Alliance, said MasterCard’s announcement solidifies the path for next-generation payments that will be based on a global EMV standard – one that includes emerging technologies like mobile phones and more secure eCommerce payments.
“It is time for the four sides of the payments ecosystem — issuers, processors, merchants and consumers to collaborate on the opportunities for innovation that MasterCard’s announcement enables,” he says.
If you are commenting using a Facebook account, your profile information may be displayed with your comment depending on your privacy settings. By leaving the ‘Post to Facebook’ box selected, your comment will be published to your Facebook profile in addition to the space below.
Advertising Disclosure: CreditCardGuide.com is an independent, advertising-supported comparison service. The owner of this website may be compensated in exchange for featured placement of certain sponsored products and services, or your clicking on links posted on this website.
*Every attempt has been made to present accurate information. However, all credit card information is presented without guarantee. After clicking on an offer, you will be taken to the credit card issuer's website where you can review the terms and conditions for your selected offer.