BUFFALO, N.Y. (WIVB) – Starting next week, stores that accept credit cards for payment are supposed to have new chip-embedded card readers in place, or face some serious consequences.
U.S. banks get stuck with billions of dollars in losses due to identity fraud, every year, and that is going to change Oct. 1.
Responsibility for fraudulent credit card transactions is about to shift from the banks to the businesses that unknowingly process those crooked deals, under new rules adopted by MasterCard and Visa.
It’s called “Chip and PIN” technology, based on the EMV chip that is embedded in the card. Those “smart chips” are nearly impossible to hack, and are considered a vast improvement over the magnetic strip most of us are all familiar with.
MasterCard and Visa set a deadline of October first for merchants to have the new terminals in place. Otherwise, if a business processes a stolen or hacked credit card, that retailer will bear responsibility for covering the loss–not the bank that issued the card, according to Susan Hugill, Administrative Vice President for M&T Bank.
“If a cardholder walks into their store and has a chip-enabled card and the merchant is unable to accept that–and they have to swipe it–and that card just happens to be counterfeit or fraudulent, the merchant is going to lose that transaction.”
The way fraudulent transactions are handled now, the bank or financial institution that issued the card has to cover the loss.
“If the merchant looks at that card, swipes it, and the name and the signature look reasonably similar, the merchant typically wins that dispute, and it goes back to the issuing bank. That liability shift is going to change on October 1.”
Most consumers already have at least one of the new chip-embedded cards, but Hugill cited studies that show less than 30% of U.S. merchants are ready for the change, next week.
Home Depot has the new technology in most of its stores, and so do Walmart and Target.