Black Friday, Cyber Monday, and Credit Cards with Chips

Nov 10, 2014

MoneyLife100A lot of shopping goes down on Black Friday and Cyber Monday – the Friday and Monday immediately following Thanksgiving. According to the National Retail Federation, U.S. retail sales for 2013 on Black Friday totaled $57 billion, and U.S. sales for 2013 Cyber Monday came in at $1.7 billion.

Credit and debit cards are a common means of payment for both of these retail events. So when it comes to your financial security, you need to be vigilant. During the 2013 holiday season, Target alone had more than 40 million credit card numbers stolen through malware that was put on its point-of-sale terminals.

Credit and debit cards are used much more regularly than they ever were, so there is more opportunity for cards to be lost or stolen. The typical U.S. credit or debit card has a magnetic stripe that contains confidential cardholder information, so an easy way for a  thief  to make unauthorized purchases, either in person or online, is to obtain your card. In theory,  in-person purchase authentication could involve the merchant checking the signature on the back of card with the signature of the party who possessed the card for large purchases, but some merchants skip this step.  

Another way credit and debit card fraud can occur is through counterfeit cards. For example, a waiter at a restaurant may have something called a skimmer that captures the card number and allows for a magnetic stripe card to easily be manufactured.

The cost of credit and debit card fraud can be difficult to estimate, but Business Insider Intelligence estimates that global card fraud cost $14 billion in 2013, including $7.1 billion in the United States. This represents a growth of 29 percent in 2013 in the United States, and growth of 11 percent outside the United States.

Technology is coming that will make your Black Friday shopping more secure. Known as EMV (short for Europay, MasterCard, Visa), or ”Chip and Signature” this type of card increases security through an embedded microchip that encodes information differently for each transaction.. The chip also makes the cards more difficult to counterfeit.

“Chip and Signature” cards, the signature authenticates the purchase. By 2015, the majority of all credit cards in the United States will be “Chip and Signature” cards, so you may get one soon.

EMV technology has not been used in the United States because of relatively low costs of fraud in the past. But U.S. credit card companies are beginning to see greater impact. There will be a cost to U.S. merchants to upgrade terminals, and it costs about four times more to manufacture a card with a chip, but it may be worth it if fraud can be controlled as it is in other countries. The real impetus for merchants to invest in new terminals is that beginning in 2015, U.S. credit-card companies will charge merchants for fraud that comes from magnetic stripe cards. Chip cards will still have magnetic stripes to support those merchants who do not migrate to new terminals.

There are several excellent websites that rate EMV cards. If you travel internationally, you should review those websites so you can apply for a card that provides the most benefits. To learn how to better protect yourself from credit card fraud this holiday season visit, www.picpa.org/moneyandlife.
About PICPA

The Pennsylvania Institute of Certified Public Accountants (PICPA) is a premiere statewide association of more than 22,000 members working in public accounting, industry, government, and education. Founded in 1897, the PICPA is the second-oldest state CPA organization in the United States.

Money & Life Tips are a joint effort of the AICPA and the Pennsylvania Institute of Certified Public Accountants (PICPA), as part of the profession’s nationwide 360 Degrees of Financial Literacy program.


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