LOS ANGELES (CBSLA.com) — Credit and debit cards equipped with new microchips will become the industry standard starting Thursday, making way for a more secure purchasing process expected to reduce counterfeiting, according to online reports.
Instead of swiping the card’s magnetic strip through a reader – which Money magazine cites as the source of 37 percent of all credit card fraud in the U.S. – shoppers now insert the card so machines can read the tiny metallic chip inside.
It’s referred to in the industry as EMV, named after the three companies – Europay, MasterCard and Visa – that developed the chip card in the 1990s, and is supposed to fend off fraud, the Los Angeles Times says.
The newspaper reports the credit card industry is penalizing merchants and credit card companies who don’t adopt the chip technology by having them now be responsible for covering counterfeits.
But a recent Wells Fargo/Gallup survey found only 29 percent of small business owners intended to have readers that accept chip cards in place by Thursday, the Times reports. The new readers cost anywhere from $50 to $600.
Target paid $100 million to install EMV technology, including updating their stores’ software and issue shoppers new cards, company spokeswoman Molly Snyder told the Times.
Nationwide, the cost of new readers, software and other expenses could reach up to $35 billion, according to the National Retail Federation.
The credit card industry hopes EMV technology makes a dent in the millions of fraudulent credit card transactions reported each year. The Times reports that in 2012, 13.7 million forged credit card transactions totaled $2.3 billion in charges.