NEW YORK (FOX 5 NY) - The deadline to switch over to chip credit cards is October 1, 2015, but a lot of consumers don't have the cards yet and a lot of retailers aren't ready to take them. So what's going on? According to Ross Kenneth Urken, Personal Finance Editor at TheStreet.com, only 63% of Americans are using chip cards and just 47% of retailers are expected to accept them, but that's slowly changing.
Starting on the 1st, if retailers don't have the equipment to accept chip cards, they're on the hook for any fraud that occurs on transactions made in their stores. Why are we switching to chip cards in first place? The United States is one of the last countries to get on board with this system that Europe has been using for years. Chip cards are safer and more secure than the magnetic stripe cards we use now. After the Target data breach, the major credit card companies decided it was time to make their cards harder to hack.
Matt Schulz, Senior Industry Analyst at Creditcards.com, says chip cards are safer for a few reasons:
First, they don't transmit your credit card information to the merchant. Instead, the cards pass on a unique transaction code. If hackers get that code and try to re-use it, they won't be able to. It's like stealing an expired password. The cards themselves are also tougher to counterfeit because of the chip they contain.
In spite of the October 1 deadline, some stores and banks are taking their time with the chip upgrade, because of the expense and concerns that the transition could slow down business as customers and employees get used to the new cards.
If you haven't already received one, expect a chip card by the end of the year.
In the meantime, the issuers and merchants that are dragging their feet are taking the chance that if you get hacked, they're on the hook.
Don't worry though, the chip changeover won't impact consumer liability, Schulz says the only problem you'll have if you swipe your card instead of using the chip is that you won't have the extra protections that chip technology provides.
A few other things to keep in mind:
Chip cards don't offer extra protection online, so you're still vulnerable when you're shopping on the web.
These new chip cards will still have magnetic stripes on the back, so if you're somewhere that doesn't have a chip terminal, you'll still be able to use them.
Don't expect to see chip terminals at gas stations for a while. They have until 2017 to convert their gas pumps.
And finally, here in the U.S., most of the chip cards will be chip and signature cards, not chip and pin code cards.
Pin code cards are even more secure, and the banks are eventually expected to make that transition as well.
For now, they're easing into the change.