Two months after Oct. 1 deadline, most retailers aren’t able to read credit cards with chips, survey shows
December 07, 2015
Although four-dozen national and regional retailers have installed checkout terminals with slots to read credit cards with embedded computer chips, three-quarters of them haven’t enabled the devices chainwide, according to a survey by ConsumerWorld.org.
Credit card issuers set an Oct. 1 deadline for stores to begin accepting the cards, which help reduce credit card fraud.
While the rules are different among credit card brands, usually, if a store doesn’t use the new, more secure system when a chipped-card is offered by a consumer, it will be financially liability for fraud losses. Before, card issuers were responsible.
To use a chip card, shoppers insert or "dip" their credit card into a slot in the retailer's checkout card terminal, which authorizes the purchase. Chipped cards help prevent the use of counterfeit credit cards by transmitting a unique code for each transaction.
"It's seems crazy that millions of dollars have been spent to issue chipped credit cards and to install special card readers, but shoppers' security is no better than it was before because the systems haven't been enabled yet by most retailers," said Consumer World founder Edgar Dworsky. "It is also frustrating and confusing for shoppers who see the new terminals but don't know whether to swipe or 'dip' their credit cards."
The 48 retail chains surveyed were questioned, or observed through in-store spot-checks, between Dec. 1 - 5. All except Radio Shack had payment terminals equipped with card slots for chipped cards, but three-quarters of those stores didn't have them working yet.
Only 11 chains in the survey have enabled the system chainwide and are processing payments using chipped-cards. Target, Walgreens, Home Depot, Rite Aid, Macy's, Best Buy, Walmart, and Sam's Club have them in all stores.
Lowe's, Old Navy, and Office Depot/Max had the system enabled in at least the test stores checked, but they didn’t respond to the survey.
Among the 75 percent of retailers that haven’t enabled the chip technology chainwide are Sears, Kmart, Costco, Michael's, Toys 'R' Us, Bed Bath & Beyond, T.J. Maxx, Marshalls, Sports Authority, Foot Locker, Whole Foods, Stop & Shop, Petsmart, Kohl's, Staples, Safeway, Kroger, and CVS. CVS expects full operation by the end of the year.
Why aren't stores with card-slot-equipped terminals using them?
It’s a complicated and expensive process to get a store's system to properly interface with all the credit card networks, according to a large chain that is fully using the system.
Others reasons provided in the survey: They’re still testing the software; stores got specifications late from some of the card networks; some card networks are slow to certify retailers' systems; stores don't want to make system changes during the busy holiday shopping season; some need to change the module inside the card-slot reader; and some say that they’re only partway through rolling out the system to their stores.
In addition, there has been controversy surrounding the introduction of chipped-cards, Dworsky said.
Transactions take longer to process. Some retailers question the security provided by the new system in protecting card data from hackers. And banks have been criticized for only requiring a signature rather than a more secure PIN number when using these cards.
Some large retailers such as Target, as well as a group of state attorneys general, are urging the adoption of both "chip and PIN" when making a purchase. However, some have argued that it’s too difficult for shoppers using the new cards to remember a PIN number.
Bank industry analysts estimate that 70 percent of credit cards will be chip-enabled by the end of the year. Stores that haven’t yet updated or turned on their systems can still accept chipped credit cards the old way – by swiping.
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