Retailers Face Challenges, Concerns as Secure Chip-based Card Deadline Nears

The move to more secure chip-based cards in the U.S. is well underway.

In an article written for the National Retail Federation’s STORES Magazine, NRF Senior Vice President and General Counsel Mallory Duncan said that the industry projects that 50-60% of credit cards could be chip-based by the end of the year.

The shift is the result of an Oct. 1 deadline, which will require merchants to be ready to accept new chip-based cards or face increased liability if the cards are used fraudently, according to the STORES magazine article.

In the wake of high-profile data breaches, the credit card industry has pushed the issue of chip-based cards, called Europay MasterCard Visa cards, which are presumably more secure and harder to copy than current magnetic stripe cards.

Despite the looming deadline, many retailers won’t be ready, the STORES article reported.

“Reasons range from ignorance about the mandate to justifying the implementation costs to a heated debate between retailers and the card industry on whether the new cards will provide all the security they could,” the article reported.

Although STORES reported that it’s not necessary for small businesses to be 100% ready to run chip-based cards on Oct. 1, it is necessary to understand the new system, which will require new equipment and make retailers responsible for fraudulent transactions.

“Under the new system, if a retailer accepts a chip card but doesn’t have a chip reader, the bank will no longer bear responsibility for fraud if the card is counterfeit, shifting the burden to the retailer,” STORES reporter Lauri Giesen wrote. “If the fraud is on the user side, the retailer maintains responsibility.”

Tire dealerships of any size should weigh the risk of operating non-compliant against the costs of updating equipment, training staff and the threat of potential breaches when preparing for the deadline.

Continue reading STORES magazine’s article, which addresses certification, risk management and the opportunity for retailers, on the National Retail Federation’s website here.