Last September, you didn’t have to look far to find a news article outlining how credit cards were on the cusp of a major change. On Oct. 1, 2015, banks began shifting some of the liability for charges made with counterfeit cards to retailers. To avoid being saddled with the cost of fraudulent purchases, stores would need to switch over their credit card processing terminals to read credit cards embedded with a chip.
Some predicted chaos in the checkout as consumers and retailers alike grappled with a new card processing procedure that involved inserting — otherwise known as dipping — a card into a reader rather than swiping it. However, it is now six months past the liability shift, and there has been little chaos or even confusion. In fact, many people don’t even have a credit card with a chip yet, and those who do are just as likely to be asked to swipe their card as dip it.
[Read: 6 Things You Need to Know About the New Chip Cards.]
What happened? U.S. News spoke to three sources knowledgeable about chip cards to find out.
Remain calm: It’s all going according to plan. Jack Jania, the senior vice president of global strategic alliances for digital security firm Gemalto, says the transition is going as planned. “This year, we’ll easily see 600 million [chip] cards in the market,” he says. “From an issuing side, EMV is well underway.” EMV stands for Europay, MasterCard and Visa and is the industry term used to refer to the standards governing chip cards.
Other countries have already adopted the EMV standard, and Jania says it typically takes 36 months from the issuance of cards to nearly full adoption of chip reading technology by retailers. However, the U.S. has 18 major card processors, which could mean a slower roll-out as compared to Europe, where Jania characterizes the processing system as “monolithic.” Overall, it could be six years until the U.S. reaches the point at which 75 percent of transactions are EMV-compliant.
Stephanie Ericksen, vice president of risk products for Visa, echoes Jania’s comments. “From our perspective, it does take several years for a country to transition,” she says. “October 1 was the starting point.”
[See: Best Credit Cards.]
Retailers say equipment certification is slowing them down. While Ericksen uses the word “encouraged” to describe the rate by which EMV cards are being adopted, retailers may be more likely to use the word frustrated. “The situation has been very frustrating for retailers and customers,” says J. Craig Shearman, vice president of government affairs public relations with the National Retail Federation. “The banks made a huge deal about setting a deadline and then dropped the ball.”
According to Shearman, merchants can’t simply purchase new credit card terminals and begin using them immediately. Card processors must send out workers to certify the equipment first, and some retailers are stuck waiting months for that to happen. “All the card readers you see [in stores] are evidence that retailers have done their part,” Shearman says. If there is any blame to be had for consumers not yet dipping cards, he says it should be laid at the feet of the card industry.
Liability, not consumer security, is the main concern. Consumers may be left scratching their heads over the lack of functional chip card readers in stores, but both retailers and card issuers say the slow transition shouldn’t affect shoppers. “Consumers are always protected by zero fraud liability by Visa,” Ericksen says. As a result, people aren’t on the hook for charges made with a lost or stolen card, regardless of whether they are using a chip card or a card with only a magnetic strip.
On the question of liability, the issue isn’t so clear-cut. Some merchants have reported a jump in chargebacks since the liability shift on October 1, and in many cases, those costs have had to be absorbed by retailers who do not have EMV-compliant systems in place. It’s a situation that has some stores crying foul, particularly in instances when a merchant is waiting on certification.
That’s the case with Florida-based B&R Supermarket which says it has had to shoulder the cost of $10,000 in chargebacks over a 4.5 month period. The store has filed a lawsuit against a number of card issuers and networks amid claims that the companies are purposely delaying certification of processing equipment.
Ericksen was not asked about specific legal action but did say that each processor is handling the delayed certification situation differently. While stores are supposed to have their EMV terminals turned on to avoid liability for fraudulent charges, some processors are not charging merchants if they are awaiting certification.
While retailers and card processors hash out their differences about liability, Jania says consumers should simply sit tight and wait for the rollout process to run its course. “This is normal,” he says. “This is the way it happens.”
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Why Are We Still Swiping Our Credit Cards? originally appeared on usnews.com
