As it stands, there are some countries in the world that still uses credit cards with magnetic stripes. The US is one of them. This is opposed to credit cards in Europe which rely on a smart chip. Well thankfully it looks like the US will be shifting away from magnetic stripes and will be making a transition to smart chips in the next 18 months.
According to a report from Bloomberg, major credit card companies such as MasterCard and Visa have already set internal deadlines, which will see them make the changes by October 2015. Given that there are 1.2 billion credit and debit cards in the US, this means that the changes will be pretty big and will take some time.
The changes will also affect vendors who will need to change their terminal systems and readers to accommodate the new cards, and if they don’t, they will be held responsible for any fraud that might occur, which is actually one of the reasons behind the changes. In fact the recent Target data security breach highlighted the flaws of the magnetic stripe system.
The system is a pretty old one, meaning that the technology is a lot easier to counterfeit compared to the smart chips. According to Nick Holland of Javelin Strategy & Research, he estimates that it will take banks and card holders as long as 3 years to make the switch.
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