chip card retailerIf you live in the U.S., chances are you’ve received a new credit or debit card in the past year with a chip embedded in it. However, you’ve probably noticed that you can’t use your chip to make payments everywhere yet. Although it’s been more than a year since the October 2015 liability shift date when merchants were supposed to have switched over to chip-enabled card readers, as of early December 2016, only one-third (1.7 million) of U.S. merchants accept chip cards. Wondering why this is? We explore the progress of chip card implementation in the U.S. and explain when you can expect this technology to be fully integrated into all American businesses.

What’s the big deal with chip cards anyway?

Most Americans are familiar with the traditional debit or credit card that features a magnetic stripe down on side which you swipe at payment terminals to make a purchase. That magnetic stripe stores all of your card’s data, which means if your card is stolen, either by someone physically taking it or through a hijacked terminal or ATM, it’s easy for thieves to commit fraud with your card. EMV chip cards still have a magnetic stripe, but they are also embedded with a microchip which creates an individual transaction number every time you use your credit or debit card to make a purchase. This means there isn’t stored data that can be stolen, making chip cards inherently more secure.

When it comes to chip cards, the U.S. is many years behind other countries. There are two ways to pay with a chip card — chip and PIN or chip and signature. The former is far more secure, however, chip and signature is what you’re most likely to see in the U.S. Banks favor this method, citing the inconvenience caused by making people remember and use PINs for their credit card transactions — but critics say the truth is that chip and signature saves them money, since they don’t have to store customers’ PINs. Regardless of which is the more secure method, the bottom line is that EMV chip technology is leaps and bounds ahead of plain old magnetic stripes when it comes to card security.

So why haven’t all merchants upgraded to accept chip cards?

The October 2015 deadline given to retailers by Visa and MasterCard for upgrading their systems to accept chip cards was not a mandate. Instead, it was an incentive — after Oct. 1, any merchant without the right equipment would be held liable for fraud that occurred in their store (something that’s usually the bank’s responsibility). However, the date came and went, and few were prepared. Even worse, as the busy holiday season got underway, some merchants who had met the upgrade deadline opted to simply shut off their chip readers altogether to avoid the long lines and hassle anticipated. An entire year later, many customers are still encountering chip-enabled terminals with tape over the card slots to prevent use.

Reasons for merchants not upgrading vary. It’s expensive to upgrade to chip-enabled payment terminals, so some smaller businesses where fraud isn’t that big of a deal have avoided the extra cost and hassle. Those who have made the effort to upgrade have experienced delays in getting the equipment as well as a long process for making sure the new terminals are compliant with their existing systems and making sure things are working properly before customers can use them. In June 2016, Visa announced initiatives to help accelerate chip card migration for merchants — by that point, only 1.2 million locations were chip-capable.

When can we expect to see a full migration to chip technology in the U.S.?

Unfortunately, it will probably be at least three years — if not longer — before all merchants in the U.S. have fully migrated to chip-enabled readers. The adaption process has been slow and mired with roadblocks and detours. On Dec. 1 of this year, Visa and MasterCard made separate announcements that they were extending the October 2017 deadline for automated gas pumps to accept chip cards to October 2020. The reasons for this extension include technological challenges, like varied weather conditions, as well as regulatory issues, such as a sufficient supply of chip-compliant hardware and software. Merchants aren’t the only ones facing pressure to upgrade; ATM operators were given October 2016 and October 2017 deadlines to upgrade by MasterCard and Visa, respectively, or face responsibility for any fraud committed via their machines. Since the cost for a chip-compliant ATM upgrade is steep, it’s likely there will remain a plethora of non-compliant ATMs across the U.S. for years to come.

What does all of this mean for everyday consumers?

If you’re in possession of a credit or debit card with an EMV chip, your best bet is to use it as often as you can. Don’t have one yet? You can contact your bank, credit union or credit card issuer to request a chip-enabled credit card. The impact of chip technology on credit card fraud has been significant around the world, and it’s inevitable that we will see similar benefits here in the U.S. In fact, by January 2016, just three months after the merchant liability shift deadline, Visa announced it was seeing a 26% decline in counterfeit fraud at chip-enabled retailers. That said, it’s important to remember that criminals are intelligent and driven, and there are a number of chip card scams that have cropped up. Also, as it’s become more difficult for fraudsters to steal credit card data outright to create counterfeit credit cards, they’ve switched to using stolen identity information — much of it stolen in past large-scale data breaches — to simply open new credit card accounts instead. Protecting your identity is more important now than ever, so you should follow our identity theft protection blog to keep up with the latest tips and information.

Wondering which chip-enabled credit card is the best option for you? Check out our credit card reviews to find the perfect card tailored to your needs.