New chip credit cards to change checkout process, provide extra security

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INDIANAPOLIS, Ind. (October 1, 2015) - Updated security measures are now in place aimed at protecting consumers from credit card fraud. The implementation of new liability rules started Thursday.

Many people already received new credit or debit cards in the mail featuring chips. These chips contain payment information and create a code for each transaction. New card readers will be able to verify the payment information instead of sending the data to a company server. Data breaches in the past involved criminals hacking into such servers.

"It's the biggest change in the way we use credit cards in decades, and people aren't ready yet," said Matt Schulz from "There's a lot of confusion out there."

Instead of swiping cards at checkout, customers will be asked to dip their cards into the new card readers. The process is expected to take a few seconds longer than the old way.

A survey by shows only 6 in 10 Americans have their new chip cards. Many retailers are still putting the new cards readers in place. Experts say the transition will be gradual.

"You'll still see the magnetic stripe on the back of the card, so essentially if the point-of-sale device hasn't been refreshed with the ability to read the chip, the point-of-sale device will still be able to read the magnetic stripe," said Doug Johnson from the American Bankers Association.

The immediate shift with the credit card process is that the party with the lowest protection for the consumer will be held liable for any fraudulent charges. If the card issuer does not provide customers with a new chip card, the issuer is held liable and must reimburse the customer. Retailers that do not provide the new card readers to customers with chip cards will liable for the stolen information.

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