Fortune reports that around 70 percent of all active U.S. credit and debit cards will be installed with these chips by the end of the year. However, after MasterCard and Visa have issued the October 1 deadline for banks and business to adopt these cards, The Boston Globe reports that many companies and banks are running behind. After this deadline, these banks or businesses will be mandated to bear the burden of fraudulent charges if they are still issuing magnetic stripe cards or utilizing these old card readers.
With this new chip, it works like a micro-computer to essentially determine whether or not the person using the card is you and a legitimate purchase. The chip can be equipped with data like your balancing tracking and parameters to help the chip in its determination.
These EMV cards are already used in Europe and other parts of the world, which leads to many declined transactions on both ends. In an interview with Fortune, Carolyn Balfany, MasterCard's SVP of U.S. product delivery for EMV, said that when many Americans travel to Europe and use their lower-resistant, magnetic-stripe cards, clerks suspect fraud due to these EMV cards being the norm.
However, when Europeans visit the U.S. many retailers are not equipped to handle more sophisticated transactions with chipped cards. Balfany said this movement to push for the adoption of EMV cards is partially to bring the world on more equal footing. Though this chip is not a fool-proof effort to stop all fraudulent transactions, it will hopefully lead to a decrease in such successful criminal activities.