Since late last week some consumers have been dipping their plastic instead of swiping and, from most reports, have encountered little difficulty in the switch-over to the EMV chip card system.
Retailers, on the other hand, are not completely sold. In a message to Congress, the National Retail Federation (NRF) said any new chip-and-signature credit cards that do not also require a PIN will not stop data breaches. The trade group says small businesses should not be pressured to install the equipment to accept the new cards at the expense of more effective technology.
“The new EMV equipment does not stop breaches,” NRF Senior Vice President for Government Relations David French said in prepared testimony before the House Small Business Subcommittee. “Indeed, in many cases it 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.”
Additional expenses that will ultimately be passed along to consumers in the form of higher prices.
Could pre-empt mobile payment
The NRF warns that if small businesses are pushed to adopt EMV technology, alternatives such as near-field communication contactless payment, mobile wallets, and other smartphone-based technology “may effectively be locked out of the market.”
“These are important considerations that businesses of all sizes must carefully ponder,” French said. “It would be inappropriate to prejudge their decision-making and stampede businesses into the adoption of solutions less protective for businesses and consumers than what has existed throughout the industrialized world for more than a generation.”
While many consumers have received new credit cards in the mail, containing chips to hold encrypted data, just as many haven't. They're still using the old magnetic strip cards that still work.
The only real change that occurred on October 1 was liability in case of fraud shifted from credit card companies to retailers that have not moved over to the new system.
Banks are still in the process of issuing new cards containing a computer microchip that will eventually completely replace cards’ easily copied magnetic stripe to store data. But French said retailers are concerned the new security measures don't go far enough. He says the cards also need a secure personal identification number, or PIN, which would eventually replace easily forged signatures.
French says the chips make the cards more difficult to counterfeit but do nothing to protect lost or stolen cards. If the chip cards also required a pin, he said that would prevent both types of fraud.
If you haven't seen many of the new chip card readers in your recent shopping trips, it might not be much of a surprise. Many retailers have yet to install them.
French says chip card readers and installation can vary from “a few hundred dollars to thousands of dollars” per terminal. The industry average is around $2,000.