The nationwide shift to EMV has begun.

EMV -- which stands for Europay, MasterCard and Visa -- is a global standard for cards equipped with computer chips and the technology used to authenticate chip-card transactions.

In the wake of numerous large-scale data breaches and increasing rates of counterfeit card fraud, U.S. card issuers are migrating to this new technology to protect consumers and reduce the costs of fraud.

"These new and improved cards are being deployed to improve payment security, making it more difficult for fraudsters to successfully counterfeit cards," says Julie Conroy, research director for retail banking at Aite Group, a financial industry research company. "It's an important step forward."

For merchants and financial institutions, the switch to EMV means adding new in-store technology and internal processing systems, and complying with new liability rules. For consumers, it means activating new cards and learning new payment processes.

Most of all, it means greater protection against fraud.

The EMV "ship has sailed" in the U.S., according to Martin Ferenczi, president of Oberthur Technologies, the leading global EMV product and service provider. Consumers will receive their first chip-card soon, if they have not already.

"I predict that by the end of this year, every household will have at least one card with a chip," he says. 

Want to know more about the transition? Here are eight frequently asked questions to help you understand the changes.

1. Why are EMV cards more secure than traditional cards?

It's that small, metallic square you'll see on new cards. That's a computer chip, and it's what sets apart the new generation of cards.

The magnetic stripes on traditional credit and debit cards store contain unchanging data. Whoever accesses that data gains the sensitive card and cardholder information necessary to make purchasaes. That makes traditional cards prime targets for counterfieiters, who convert stolen card data to cash.

"If someone copies a mag stripe, they can easily replicate that data over and over again because it doesn't change," says Dave Witts, president of U.S. payment systems for Creditcall.

Unlike magnetic-stripe cards, every time an EMV card is used for payment, the card chip creates a unique transaction code that cannot be used again.

If a hacker stole the chip information from one specific point of sale, typical card duplication would never work "because the stolen transaction number created in that instance wouldn't be useable again and the card would just get denied," Witts says.

EMV technology will not prevent data breaches from occurring, but it will make it much harder for criminals to successfully profit from what they steal.

Experts hope it will help significantly reduce fraud in the U.S., which has doubled in the past seven years as criminals have shied away from countries that already have transitioned to EMV cards, Conroy says.

"The introduction of dynamic data is what makes EMV cards so effective at bringing down counterfeit card rates in other countries," she says.

2. How do I use an EMV card to make a purchase?

Just like magnetic-stripe cards, EMV cards are processed for payment in two steps: card reading and transaction verification.

However, with EMV cards you no longer have to master a quick, fluid card swipe in the right direction. Chip cards are read in a different way. 

"Instead of going to a register and swiping your card, you are going to do what is called 'card dipping' instead, which means inserting your card into a terminal slot and waiting for it to process," Conroy says.

When an EMV card is dipped, data flows between the card chip and the issuing financial institution to verify the card's legitimacy and create the unique transaction data. This process isn't as quick as a magnetic-stripe swipe.

"It will take a tiny bit longer for that transmission of data to happen," Witts says. "If a person just sticks the card in and pulls it out, the transaction will likely be denied. A little bit of patience will be involved."

3. Is card dipping the only option?

Not necessarily. EMV cards can also support contactless card reading, also known as near field communication.

Instead of dipping or swiping, NFC-equipped cards are tapped against a terminal scanner that can pick up the card data from the embedded computer chip.

"Contactless transactions are more consumer-friendly because you just have to tap," Ferenczi says. "Around the world, there is a move to make EMV cards dual-interface, which means contact and contactless. However, in the U.S., most financial instructions are issuing contact cards."

Dual-interface cards and the equipment needed to scan them are expensive. Right now, the first step is to successfully integrate EMV cards into the U.S. shopping scene. Dual interface will arrive later, according to Ferenczi.

4. Will I still have to sign or enter a PIN for my card transaction?

Yes and no. You will have to do one of those verification methods, but it depends on the verification method tied to your EMV card, not if your card is debit or credit.

Chip-and-PIN cards operate just like the checking-account debit card you have been using for years. 

Entering a PIN connects the payment terminal to the payment processor for real-time transaction verification and approval. However, many payment processors are not equipped with the technology needed to handle EMV chip-and-PIN credit transactions. So it is not likely you will have to memorize new PINs anytime soon, according to Conroy.

"There aren't going to be many issuers requiring a PIN," she says. "A vast majority will be issuing chip-and-signature cards, which aren't all that different from how credit cards work now."

As with a magnetic-stripe credit card, you sign on the point-of-sale terminal to take responsibility for the payment when making a chip-and-signature card transaction.

Once the transition to EMV is under way in the U.S., chip-and-PIN cards will be transitioned in. Again, it is one step at a time, according to Ferenczi.

"I predict we will start seeing some chip-and-PIN cards in 2015, and then it will probably take two to three years to fully convert to chip-and-PIN," he says.

Despite a slow transition overall, those who get chip-and-PIN cards will be able to use them right away.

"If a terminal doesn't have the ability to accept a PIN, it will then step down to accepting a signature," says Randy Vanderhoof, executive director of the Smart Card Alliance. "There will always be a secondary option."

5. If fraud occurs after EMV cards are issued, who will be liable for the costs?

Today, if an in-store transaction is conducted using a counterfeit, stolen or otherwise compromised card, consumer losses from that transaction fall back on the payment processor or issuing bank, depending on the card's terms and conditions.

Following an Oct. 1, 2015, deadline created by major U.S. credit card issuers MasterCard, Visa, Discover and American Express, card-present fraud liability will shift to whoever is the least EMV-compliant party in a fraudulent transaction.

Consider the example of a financial institution that issues a chip card used at a merchant that has not changed its system to accept chip technology. This allows a counterfeit card to be successfully used.

"The cost of the fraud will fall back on the merchant," Ferenczi says.

The major credit card issuers each have published detailed schedules about the upcoming shift in liability. The change is intended to help bring the entire payment industry on board with EMV by encouraging compliance to avoid liability costs.

Any parties not EMV-ready by October 2015 could face much higher costs in the event of a large data breach.

Automated fuel dispensers will have until 2017 to make the shift to EMV. Until then, they will follow existing fraud liability rulings.

6. So by Oct. 1, 2015, the transition to EMV technology will be complete? 

Not exactly.

Although the upcoming deadline is strong encouragement for all payment processing parties to become EMV-compliant as soon as possible, experts do not believe everyone will comply by that date.

"Don't expect a big bang in October of 2015," says Doug Johnson, vice president of risk management policy for the American Bankers Association. "In terms of rollout, we expect about 50 percent of banks and retailers to be completely transitioned over. It's going to take a little time to adapt."

Aite Group estimates that by the end of 2015, approximately 70 percent of credit cards and 40 percent of debit cards in the U.S. --1.1 billion cards total -- will support EMV. 

"We are the most fragmented and the largest market that has ever gone to the EMV standard," Conroy says. "There's going to be varied customer experiences over the first year, year-and-a-half of this transition."

7. If I want to use my chip-card at a retailer that doesn't support EMV technology yet, will it work?

Yes. The first round of EMV cards -- many of which are already in consumers' hands -- will be equipped with both chip and magnetic-stripe functions so consumer spending is not disrupted and merchants can adjust.

If you find yourself at a point-of-sale terminal and are not sure whether to dip or swipe your card, have no fear. The terminal will walk you through the process.

"For example, if you enter a card into the chip reader slot but the reader isn't activated yet, it will come up with an error and you'll be prompted to swipe the card in order to use it," Vanderhoof says.

And vice-versa.

"If a consumer tries to swipe a chip card instead of inserting it, an error will appear and they will be prompted to insert the card for chip processing instead," Vanderhoof says.

If chip-card readers are not in place at a merchant at all, your EMV card can be read with a swipe, just like a traditional magnetic-stripe card.

"You can still conduct transactions, you just lose that extra level of chip security," Johnson says.

8. Will I be able to use my EMV card when I travel outside the country?

Yes and no.

The U.S. is the last major market still using the magnetic-stripe card system. Many European countries moved to EMV technology years ago to combat high fraud rates. That shift has left many U.S. consumers who have magnetic-stripe cards looking for other forms of payment when they travel.

Since many foreign merchants are wary of magnetic-stripe cards, consumers who hold some type of chip card may run into fewer issues than those without one, according to Ferenczni.

"Just the existence of the chip will likely make European merchants more willing to accept transactions that they wouldn't have likely accepted if a customer presented a mag-stripe card," he says. 

However, chip-and-PIN cards are the norm in most other countries that support EMV technology. So consumers with chip-and-signature cards may still find merchants who are unwilling or unable to process their card, even though it does have an embedded chip.

Unmanned payment kiosks in Europe -- such as bike rental stations, train ticket stations and parking permit dispensers -- may give U.S. travelers the most difficulty since most are set up to strictly accept chip-and-PIN card only, according to Ferenczi.

But despite any difficulties in the transition, Ferenczi says the change is a step in the right direction.

"Nobody likes to think that his or her card is being secretly used for other purposes," he says. "So I think regardless, there is a level of comfort knowing that it will be far more difficult to counterfeit EMV cards."

See related: How soon should retailers switch to EMV?, Data breaches turn spotlight on EMV cards