Smart-chip credit card deadline looms for small businesses
The magnetic strip on U.S. credit cards is about to become obsolete.
Millions of Americans are receiving credit and debit cards with a new security technology to make cards more secure. Chip-enabled cards are outfitted with new technology called EMV, which stands for Europay, MasterCard and Visa, the three companies that created the standard for processing payments.
It’s part of a nationwide shift by major card companies to offer added security against fraud, and to shift fraud liability from the card issuer to merchants if they don’t upgrade to this technology by Oct. 1.
Smart-chip cards require a specific card reader, but according to a July survey conducted by Wells Fargo and Gallup, nearly half of all small business owners in the U.S. were unaware of the pending liability shift.
Patrick Romero, owner of Video Game Exchange & Comics in Colorado Springs, said he was aware of the change and acted quickly to order a new smart-chip card reader for his business.
“I need to be up on technology to not only take care of my customers, but, one thing that’s important, if there’s any kind of fraud or theft, we’re going to be liable or responsible, and being a small business we don’t want that kind of pressure,” Romero said.
The problem is, according to Romero, with so many people ordering a new chip reader, there’s a backlog in orders. Romero estimates he’ll receive a chip reader in late October, meaning he’ll be extra cautious in accepting credit cards until he receives one.
“It could definitely hurt us as a small business,” Romero said. “We don’t want to sink because anything that we have to pay back has to come out of our pocket.”
Randy Vanderhoof, director of the Smart Card Alliance, the group helping introduce the new technology, said the benefits of chip cards are superior in battling fraud.
“The big security advantage of chip cards is they make every transaction unique. That makes it virtually impossible to create counterfeit cards to commit in-person fraud,” Vanderhoof said.
Gas stations will have two more years to switch to chip readers before assuming responsibility for fraudulent charges. The change is not expected to help combat online fraud.
