LOS ANGELES (CBSLA.com) — Credit and debit card microchips will replace magnetic stripes as the industry standard on Thursday, in a move that the banking industry hopes will protect merchants and consumers from fraud and hackers.
Some skeptics argue, however, that the new system won’t be able to stop credit card fraudsters from operating.
The shift among U.S. retailers comes many years after retailers in Europe and in other countries have made the switch.
Starting later this week, instead of swiping a card’s magnetic stripe, shoppers will “dip” their cards so a machine can read its tiny metallic chip.
The banking industry is hopeful that the tiny chips will be more secure than magnetic stripes, since the chips generate a novel number for every transaction, whereas the data contained in magnetic stripes does not change — making it easy to use over and over again.
Still, some security experts say the new cards will not be any safer in online transactions, and that merchants who only check a cardholder’s signature are also inviting fraud.
Retailers who do not upgrade their card readers by Thursday — a $500 expense in some cases — will be placed on the hook by credit card companies to cover fraudulent transactions.