Chip Cards Are Gaining Influence in the Financial Marketplace

credit-cards

Nearly 50% of credit cards, or about 600 million cards, hold computer chips. That information was provided by the Electronic Transaction Association. In addition, information provided by MasterCard and Visa shows that about 33% of all merchants are using readers to accept the chip cards. Chip card technology has been used since the 1990s. However, the complexity and cost of chip card transitions postponed the cards’ adoption in the US.

Since the rollout last October, the switch from the traditional swipe type of credit card to the more secure chip card method has not been totally smooth. According to Julie Conroy, who works as a research director for the Aite Group, the transition has been a challenge. She said, “We’ve certainly had our bumps, which most of us expected.”

The move to the chip cards was propelled, in part, by the retailer, Target. In 2013, Target indicated that the data from 40 million of their credit and debit cards was stolen during the holidays. In addition, an extra 70 million individuals had their personal details, such as email addresses, compromised.

According to a report by NerdWallet, shoppers have positive feelings about using the chip charge cards although the cards require a longer wait time per transaction. The switch to the smart credit card technology is indeed safer. The chip in the card creates a code that is unique for each transaction – one that cannot be easily duplicated by thieves like the magnetic stripes can.

By the end of 2016, it is estimated that 50% of all merchants will have migrated to using chip technology. Remaining merchants will give in to using chip cards in 2017. MasterCard stated that 88% of its credit cards currently contain chips and that two million retailers were accepting the cards. Visa reports that it currently has 363 million chip cards in circulation, all accepted at 1.5 million retail locations.