Is that little chip in your card really protecting you?

The rollout has been slow, spotty and sometimes frustrating.

New rules went into effect in October that make merchants liable for fraudulent transactions if they haven't updated their terminals to accept chip-card, or EMV, payments. But only 50 percent of locations are expected to have functioning readers by the end of 2016, according to Visa.


Card issuers aren't doing much better. There are more than 400 million chip cards now in circulation, says Randy Vanderhoof, director of the EMV Migration Forum -- but that's still only one-third of the estimated 1.2 billion total cards on the market.

They've got your number


The microchip in an EMV card drastically reduces fraudsters' ability to create counterfeit cards. But it doesn't prevent crooks from using a stolen card number to pay online or over the phone. Canada saw a 133 percent spike in fraud involving such "card not present" transactions from 2008 through 2013, as the country made the switch to chip cards, according to Aite Group.

Signature versus PIN

Chip-card users in the U.S. typically seal the deal with a signature, rather than by entering a PIN. That's not much of an obstacle for a thief who gets hold of your card. "Chip-and-signature is a half-measure," says Debra Berlyn, director of the advocacy campaign ProtectMyData.

Speed bumps at the register

Glitches abound as merchants work through the learning curve. For example, some restaurants that have enabled EMV payments have improperly configured tipping options, says Vanderhoof. Some stores haven't activated the chip capability on their payment terminals because they are still making sure the equipment is ready for prime time and their employees are properly trained. Chip transactions typically take a few seconds longer to process than those with a magnetic stripe, although many merchants are shortening the delay as they optimize their systems.

Swipe with care

Operators of ATMs and automated gasoline pumps were given a liability reprieve. MasterCard extended the deadline to October 2016 for ATMs to support updated card readers, and Visa's ATM deadline isOctober 2017. Owners of gas terminals that aren't EMV-compliant also won't face liability until October 2017. In the meantime, be on the lookout for "skimmers" that crooks place on card readers to steal data from your card's magnetic stripe.

You're still covered


The move to EMV affects the liability of merchants and card issuers. But most credit card users still enjoy zero liability for unauthorized purchases, and banks will usually cover funds stolen with a debit card as long as you report the problem promptly.

Lisa Gerstner is a contributing editor to Kiplinger's Personal Finance magazine. Send your questions and comments And for more on this and similar money topics, visit