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.
The reasons that chip card adoption is lagging are many. The first and perhaps the most immediate reason is that big merchants don't want to make changes to their process of selling merchandise during their busiest time of the year. The thinking in general is that if anything goes wrong during the height of Christmas shopping, it could devastate their sales for the year.
To some extent, this is a valid concern. It's pretty hard to persuade any company to make a major change to their IT systems during periods of high demand. Plus, the EMV transaction process is unfamiliar to most people in the U.S., and it's slower. Both of those factors could jam up checkout lines in busy stores.