MasterCard switching to 'liability shift' - FOX 35 News Orlando

MasterCard switching to 'liability shift'

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LAKE MARY, Fla. (WOFL FOX 35 ORLANDO) -

MasterCard has directed banks which issue credit cards and merchants that accept them to move toward cards with electronic chips by October of 2015.

That's when MasterCard will put into effect what it calls a "liability shift."

Seth Eisen,  V.P of Communications for Master Card, says, "And what the liability shift truly does is it provides an incentive to both the issuing bank and to the merchant to move to the most secure technology available."

The party with the least secure technology would have to pay for the fraud.

If the bank issued smart credit cards, but the merchant did not use the electronic chip card reader,  the merchant would be stuck paying for a fraudulent charge.  

Eisen says, "If both the issuing bank and the merchant are at the chip level, the opportunity for fraud should be greatly reduced."

MasterCard says it has been working on this since 2012 and some banks are already issuing the debit and credit cards with embedded chips.

The chips are already standard in Europe, Canada and Brazil.

Most of the new card readers can read smart cards, and magnetic strips.

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