Credit cards with chips are coming to the US, but I promise it'll be fine
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Version 0 of 1. Related: Why is the US a decade behind Europe on 'chip and pin' cards? | Heather Long To a European, the fact that chip-enabled credit cards make their official debut in the US next month might prompt a similar reaction to last week’s news that Walmart will stop selling assault rifles: wait, you mean this wasn’t already the case? But it wasn’t. And, actually, cards with embedded microchips won’t become ubiquitous here just yet. October 1 merely marks the “liability shift”, when retailers that continue to allow transactions using the old magnetic stripe will have to assume responsibility for any fraud that happens as a consequence. And don’t go getting excited for the full Euro-style “chip and pin” experience, either. For the time being, the new US system will be chip-and-signature: you’ll insert the card into the reader, chip-first, but then sign for your purchases by hand, rather than entering a number, as they do in Europe. Depending on who you ask, this is either because of the costs of the technology or because banks are worried about pins being observed by criminals at the checkout. Or because, in the amusing words of one anonymous banking source, speaking to the fraud analyst Julie Conroy, “we don’t really think we can teach Americans to do two things at once.” The move to chips – even without pins – has taken so long, in essence, because it was cheaper just to pay for the fraud to which magnetic strips are prone. But then came the huge Target data breach of late 2013, in which details of at least 70m cards were stolen. The US is starting to feel the disadvantage of being the last market in the G20 to rely on magnetic cards: once there’s only one big country left where it’s easy to commit card fraud, that’s naturally the country to which fraudsters will gravitate. And this is only one of several ways in which the American consumer finance system strikes transatlantic visitors, or transplants like me, as bafflingly old-fashioned – like accidentally finding yourself in the pages of a nostalgic, sepia-toned coffee-table book entitled Money Memories Of Yesteryear. I was astonished when I first learned what happens when I want to send cash to a private individual – a landlord, a friend, the local protection racketeer – via online banking, but without an expensive fee. In the UK, this takes a minute or so to set up, and two or three hours for the transfer to happen, thanks to the Faster Payments Service. In the US, I must first log onto my account at a well-known bank (a bank which, incidentally, didn’t seem to have any trouble with cutting-edge technology when it came to the complex financial instruments that contributed to the 2008 financial meltdown). Then, I specify the payee. Then the bank generates a physical check – a check, made of paper, from trees, that grow in the ground! – which it dispatches by mail to the recipient, who can then take it to his or her bank to deposit it. I don’t know what happens after the check is deposited, but I imagine it involves a Cockney scamp in a flat cap, running with a message from one bank to the other, whereupon a whey-faced Bartleby-the-Scrivener type walks over to a cupboard, extracts a heavy key bearing my name, and stalks off to the cellar to unlock the box containing my savings. (The fact that this absurd check-mailing system persists into 2015 is partly the legacy of ancient software, which is a problem in different ways in the UK. But could it also have something to do with the several lost days that my bank retains access to my money, after I’ve surrendered it and before it’s been received?) Americans, for their part, are sometimes astonished when using a magnetic card in Europe – provided they can find a retailer willing to accept one in the first place – to watch the clerk scrutinize the card alongside the transaction slip, to check that the signatures match. Whereas it’s a commonly accepted fact, in American stores, that you can sign in the names of characters from True Detective, or Peppa Pig, without anyone raising an eyebrow, or even looking at what you’ve written. Indeed, evidence suggests you can even write “Crotchy Crotchington” or “I’m a criminal” and nobody will care, though you may run into trouble if, like this prankster, you draw cartoon genitals instead. But the times are changing – and I’m here, as a condescending British expat, to assure you, America, that it’s all going to be OK. There’s no need to be scared. By the end of the year, it’s estimated, around 50% of US cards in circulation will have chips. Soon enough, it’ll be all of them. And then, eventually, the conversion to chip-and-pin will come – doubtless just in time to be rendered obsolete by the latest version of Apple Pay, or Bitcoin-enabled contact lenses that enable you to purchase things by staring at them meaningfully. One day – one shining, glorious day – it might even be possible to transfer $40 from one bank to another bank in less than a week. Dare I let myself dream? If anyone reading this works at a US bank and knows when such a time might come, please hasten to see your company’s head of carrier-pigeon messaging, and let me have the answer before the year is out. |