Effective Oct. 1, liability for credit and debit card fraud theoretically shifted from banks to retailers that have not yet upgraded their payment terminals to accept the new chip-embedded plastic.
The EMV (Europay, MasterCard and Visa) smart cards, widely used in Europe and Canada, are considered more secure than older magnetic strip technology. Banks and financial services firms set the pre-holiday deadline to speed the transition following massive hacks at Target, Home Depot and other chains. But according to the National Retail Federation (NRF), they’ve been unable to meet their own deadline.
Only 40 percent of cardholders have received a new chip card, the trade association said, and credit card companies have been unable to grant the necessary software and payment terminals to retailers nearly fast enough for the Oct. 1 changeover.
In that instance, banks will continue to bear the burden of data breaches, as the new rule calls for the party using the least-secure technology to take the hit.
But as Computerworld pointed out, even having the updated card and equipment could prove problematic for unaccustomed shoppers and checkout clerks. The smart cards have to be “dipped” rather than swiped, and must remain in place until confirmed by the payment terminal. But with more than 20 vendors supplying the card readers, the confirmation alerts can vary.
“It’s organized chaos a little right now,” Retail Association of Maine executive director Curtis Picard told the publication.
What’s more, the NRF argued that the lack of personal identification numbers (PINs) on the EMV cards still leaves them vulnerable to fraud, and that their forced adoption by retailers could shut out alternative technologies such as near-field communication, contactless payment and mobile wallets.
In a statement submitted to Congress, which is holding hearings on the impact of chip cards on small businesses, NRF government relations senior VP David French stressed that “In many cases [EMV equipment] provides no significant benefits either to the business or to the business’ regular customers. It is merely an additional expense small businesses are being told to bear.”