U.S. Seriously Lags in Chip Card Use, Putting Merchants at Risk
NEWS ANALYSIS: Despite the security benefits of EMV-equipped payment cards, they are used in relatively few transactions in the United States. That is not good news for SMBs.I was walking to the register at my favorite Greek restaurant when another diner gestured for my attention. It was a friend, the owner of a neighborhood jewelry store. "I'm so glad you told me about the chip cards," he said. Then he told me that shortly after he'd been set up with an EMV card reader, someone tried to use a counterfeit card to buy some expensive jewelry. If my friend hadn't had the chip reader at his store, he would have been out thousands of dollars. The conversation about the EMV chip began two months earlier when I'd visited his store to shop for a birthday gift. When I asked him if he had the ability to use payment cards with chips, he said he'd never heard of them. I showed him the chips in several of my credit cards and explained that since it was after Oct. 1, he was now liable for any transaction that used a lost, stolen or counterfeit card, and that the bank would not be responsible for any portion of the cost. It would come out of his pocket. For whatever reason, his merchant processor had never told him about the liability shift or the availability of new card terminals. Fortunately, when he called to ask, the credit card processor arrived promptly with a new machine, which he started using immediately. He was lucky.
Most merchants, however, aren't so lucky. In fact, it appears that the vast majority of merchants in the United States don't know that the EMV liability shift deadline passed on Oct. 1 and that they are now at risk for many fraudulent transactions. According to EMVCo, the organization that sets standards for the chips and keeps track of implementation, only about 1 percent of payment card transactions in the United States are protected by secure chips.