Checkout lines are about to get a lot longer

In less than 18 months, security on U.S. credit cards is scheduled to finally exceed the level used in Mongolia and Papua New Guinea. The plan: The U.S. will abandon using just an archaic magnetic strip technology for security, and put a computer chip in every one of the U.S.'s 1.2 billion credit and debit cards. Oh, and upgrade card readers at the country's 8 million sales counters. It's a huge change that many consumers aren't even aware is in the works. Card payment networks such as Visa and Mastercard set the deadline of October 2015. And already, banks and retailers are way behind on meeting it. Just 1.5 percent of cards and 10% of sales terminals are ready, according to a new report from Javelin Strategy & Research, even as pressure has mounted thanks to large card data breaches at Target (TGT) and other retailers. Target ousted its chief executive officer this week. For a quick read on what this means for consumers, we called Nick Holland, Javelin's senior payments analyst. Here's a summary of his thoughts on the revolution coming to American wallets. How It Works “The card in your wallet now is like a cassette tape or maybe an eight-track tape – it's exactly the same stuff, a magnetic plastic strip. Every single credit and debit card, point-of-sale terminal, gas station and ATM is going to have to be transitioned to a new technology. Rather than swiping the magnetic stripe, which is a 50-year-old technology, you're going to put a chip card into a reader and it authenticates your card using the chip. The reader and the card 'do a handshake' effectively, to check that each is legitimate.” Why It's Needed “The most fundamental reason is that the U.S. has become or increasingly becoming a target – pun intended -- for counterfeiters and criminals. The magnetic stripe is ridiculously easy to counterfeit. There are about three or four other regions in the world that don't have this technology. There's Mongolia, Papua New Guinea, areas of the Middle East and Sub-Saharan Africa, and then there's the U.S.” Unfortunately, the new cards don't prevent fraud in Internet transactions where users enter their card information manually. Who's Liable for Fraud Right now, card issuers are liable for most fraud that occurs in face-to-face transactions. “What happens in October of next year is a liability shift. If you, as a retailer, don't have a point-of-sale terminal that's compatible, then any card fraud that happens as a result of that is on you. The card issuers are also liable if there's a fraudulent transaction and the merchant has the technology in place.” How Long It Will Take “Some banks and card issuers have been looking at this as a three-year upgrade, with a third of cards upgraded per year. They're starting with international travelers, high-net-worth customers and so forth, and it will trickle down to [other customers'] credit cards and debit cards in the next couple years." Potential Problems “It's going to be chaotic. In the U.K. when this happened in 2005, there was a year-long campaign, government-led, with TV commercials and billboard advertising. Everyone was told the flip was switching on Valentine's Day 2005. It was a coherent, countrywide initiative. We've not got anything like that here. You're going to have the potential for a significant lag at checkouts, because people will have to be trained in real time how to use this new form of payment.” This story first appeared on Bloomberg.com.