Roughly half of all U.S. credit and debit cards will be replaced with chip-based cards by the end of the year.
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U.S. banks, tired of spending billions each year to pay back fleeced consumers, are in the process of replacing tens of millions of old magnetic strip credit and debit cards with new cards that are equipped with computer chips that store account data more securely.Overall, the chip cards are more secure than magnetic cards, which are vulnerable because once thieves get a copy of credit card information, it can be quickly copied onto counterfeit cards.Banks are in the middle of issuing chip-based debit cards, with Bank of America starting late last year and Chase and Citi starting this summer. Regional and smaller banks are also rolling out these cards to their customers, most of them starting later this year.All chip cards also come with a magnetic strip in case chip readers aren't available. Originally the banks were relying on their own software and data from the payment networks to catch fraud at the point of sale in the U.S., but it became clear something more was needed, Richey said. Banks, particularly small banks, would often pay out of pocket to cover any fraud that happened on their customers' payment cards. Unlike magnetic strip cards, chip cards need to be left in the machine for a few seconds to work.Payment processing companies like Visa, and banks who issue the cards, are pushing stores to accept the chips cards.
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