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Rhinebeck Bank recently issued new MasterCard® Debit cards with new “Chip” technology. These cards are also referred to as EMV Cards, for the original developers Europay, MasterCard® & Visa®.
EMV began to be used extensively in Europe in the early 1990s. In 2011 the leading payment networks in the U. S. announced plans to transition to EMV technology, for both Debit and Credit Cards, by October 1, 2015. On that date liability for fraudulent transactions shifted to any entity that had not implemented the new EMV technology. Due to the expense involved in purchasing new terminals and issuing new cards many merchants and banks did not make the change by the target date of October 1, 2015. This, however, did not affect customer’s ability to use their cards, nor did it affect the consumer’s rights under regulations and network rules regarding liability for fraudulent transactions.
What is EMV and why the change?
EMV is an advanced technology where the information for each transaction is stored in the chip on the card. This information is dynamic (changing for each transaction) rather that static (remaining the same) as on the magnetic stripe on the back of cards. Magnetic stripe data is easier to copy using a simple and inexpensive card reader device, while the information on the chip changes for each transaction making it more difficult to create fraudulent cards.
As the transition to EMV cards has progressed throughout the U. S. there has been a notable decrease in counterfeit card fraud. The following statistics, recently published by the American Bankers Association, show the progress that has been made in EMV card use and combating fraud.
Consumer Use Up
Financial institutions have issued over 700 million chip cards in the U. S. market, more than in any other country in the world. Since October 1, MasterCard® and Visa® have increased the number of EMV cards by over 100%, and chip transactions were up 30% in the first quarter of 2016.
Merchant Use Up
Almost 36% (2.3 million) of U. S. merchants now accept MasterCard® chip cards, with an average of 100,000 new merchants becoming chip-ready each month.
As previously mentioned EMV cards began to be issued in the early 90s in Europe and the vast majority of merchants in Europe no longer accept cards without the EMV Chip.
Counterfeit card fraud has declined by over 54% in MasterCard EMV enabled merchants as of August 2016.
It took France four years to see a 91% drop in counterfeit fraud after shifting to EMV in 2005. The U.S. is growing at more than twice that speed with counterfeit fraud falling an average 50% between April/May 2015 and April/May 2016.
So after a slow start in the U. S. EMV cards are catching on, with reduced counterfeit fraud definitely being realized. While the recent re-issue of Debit Cards may have caused some minor inconvenience for our customers we, at Rhinebeck Bank, are certain that reduced fraud, and international acceptance of EMV cards are features that will be of great benefit to our customers.