U.S. businesses on the eve of a big deadline – the switch to a new, more secure chip-based payment system – but many aren’t ready.
(REUTERS, VISA, MASTERCARD, CREDITCARDS.COM) – U.S. businesses on the eve of a big deadline – the switch to a new, more secure chip-based payment system – but many aren’t ready.
Starting October 1st, banks that fail to issue chip cards and merchants without chip-card readers will have to cover the costs of fraud themselves. That deadline was set by Visa, MasterCard, and other card companies.
Visa’s Stephanie Ericksen
STEPHANIE ERICKSEN, VICE PRESIDENT OF RISK PRODUCTS, VISA INC.
“More and more merchants are going to start enabling their terminals to read the chip on your card to help prevent fraud, specifically counterfeit fraud which is about two-thirds of the fraud we see in stores today. Chip technology is specifically used to address counterfeit fraud.”
Credit card companies are pushing for the chip to avoid the kind of massive data breaches that in the past affected big chains, like Target.
But many small business owners responding to a recent Wells Fargo and Gallup survey are unaware of the liability shift, and only 31 percent have installed chip-enabled processing systems.
As for consumers, less than half of them have chip cards, according to a new study from CreditCards.com.
Matt Schulz, senior industry analyst at CreditCards.com, points to another issue.
MATT SCHULZ, SENIOR INDUSTRY ANALYST, CREDITCARDS.COM,
“Most of American banks are putting out chip and signature cards that require you to sign for the transaction the way we have for years, but the more secure way to do it, and the way that’s been done in Europe and Asia, much of the world for years, is called “chip and pin,” where instead of signing, you, actually, type in a four-digit pin code. And the reason why it’s safer is that it’s a whole lot easier to forge someone’s signature than it is to know their pin code.”
The banks say they went with the chip and signature system to make the transition from magnetic stripe easier.