Chip cards: A year later, fewer than 1 in 3 stores actually use them

chip-cardIt was one year ago Saturday that merchants faced an Oct. 1 deadline to switch to gadgets that read credit cards with chips in them — or face the risk of eating fraud charges themselves. These are the cards you “dip” in the checkout terminal and leave there for a bit, as opposed to swiping them down the side.

What’s happening? Well, it’s going more slowly than anticipated, industry groups say. Some 44 percent of merchants have chip terminals but only 29 percent actually use them because of delays activating the service, according to the The Strawhecker Group, a consulting firm in the payments industry.

Among those not in a big hurry to switch to chips: Burger joints.

That’s because reading the chip cards takes longer and slows down a drive-through or checkout line, while the risk of a fraud loss isn’t so high for a fast-food meal.

“If you are a crook, are you going to head to Burger King or the Rolex store?” said Jared Drieling, business intelligence manager for Strawhecker.

Supermarkets face a bit higher risk with items like baby formula that can be resold quickly, he said. Publix stores have recently activated the chip reader at many area stores.

Card giant Visa has declared things are proceeding “onward and upwards.” Early reports showed counterfeit fraud was down 18 percent in the first quarter of its use, compared to a year-earlier period, at the top five chip-enabled retailers, it said.

The National Retail Federation, though, says say the whole process has been “frustrating for retailers and confusing for consumers.”

“Most major retailers have done their part, but the card industry continues to drop the ball,” National Retail Federation senior vice president and general counsel Mallory Duncan said. “Retailers have spent billions of dollars to install the new equipment but card companies have failed to sign off on the installations in a timely manner. Many retailers have had new chip card readers sitting next to their cash registers for a year waiting for the card companies’ blessing. We wish they cared as much about security as we do.”





More than 40 percent of retailers are not chip-card ready, survey says

Here's what a chip card looks like. More than 40 percent of people say they don't have one or don't know if they have one.
Here’s what a chip card looks like. More than 40 percent of people say they don’t have one or don’t know if they have one.

To swipe or not to swipe?

Every day consumers encounter smart-chip credit card terminals that aren’t activated, despite the Oct. 1, 2015 deadline Visa  and MasterCard set for the transition away from magnetic-stripe card security.

Usually, store employees tell the shopper whether to insert their card with the shiny computer chip or to swipe it the old-fashioned way.

Consumers are encountering a mixed-bag of options because a surprising 42 percent of retailers have not updated the terminals at any of their stores to enable  “chip and PIN” or “chip and signature” technology, according to a  CardHub survey released Monday.

CardHub conducted a nationally representative survey of 55 major retailers and 1,000 individuals about what’s known as EMV technology. Named after its original developers (Europay, MasterCard and Visa), the technology features cards with embedded microprocessor chips designed to store and protect cardholder data.

CardHub says the retailer response is problematic considering merchants that have not implement the new system are liable for fradulent purchases made in their stores.  The roughly $8 billion in fraudulent purchases made in the U.S. each year certainly represents a “mountain of risk for resistant retailers,” CardHub says.

What do consumers think? The survey found that 56 percent of people don’t care if a retailer’s payment terminal is chip-enabled, and 62 percent don’t understand the difference between the two security standards.

Even worse, 41 percent of people say they don’t have, or don’t know if they have, a smart-chip credit card.

Sadly, 41 percent of people falsely believe debit cards  protect them from fraud better than credit cards.

Among the retailers surveyed whose stores are 100 percent EMV compliant are  WalMart,  Target, Home Depot, Walgreens, CVS, Best Buy, Macy’s, Kohl’s, Dollar General, Gap, Nordstrom, Trader Joe’s and Michael’s.

At the other end of the spectrum with 0 percent of their stores EMV-compliant as of this month are Publix, Pizza Hut, Whole Foods Market, J.C. Penney, 7-Eleven, Bed Bath & Beyond, Ace Hardware, Family Dollar, Wendy’s Staples, Burger King and Neiman Marcus.

To read the survey, go to