Many merchants still swiping long after deadline to switch to new credit, debit card technology
FARGO — They're in most everyone's wallets, but the next generation of credit and debit cards aren't accepted everywhere — long after the deadline for merchants to stop swiping and start reading chips.
EMV cards, short for Europay-Mastercard-Visa, have been around since 1994 and used in many countries since the early 2000s. But the cards, which have an embedded chip that encrypts transactions and boosts security, are relatively new in America.
Switching to EMV has been in the works for years, gaining urgency with big data breaches, including the 2013 Target breach that affected 40 million customers.
Instead of requiring the change, the U.S. opted for a liability shift on Oct. 1, 2015 — after that, merchants unwilling or unable to accept new cards were liable for fraudulent charges when the lower-tech magnetic stripes were swiped.
"The risk is not that big yet, but it's growing," said Dan Fisher, president and CEO of Fargo-based technology and payment consulting firm Copper River Group.
Nearly 11 months later, Fisher said only half of America's point-of-sale terminals accept chip payment.
Even merchants that want EMV might not be capable yet, according to Bill Russell, executive vice president of banking services for Bell Bank.
Heavy demand led to long delays in getting new equipment, he said, while chains might require companywide software upgrades before the new readers work.
"It's a combination of all those things that has made the accessibility that's out there so low," he said.
It's also a complicated and time-consuming change, according to Carrie Lick, interim deposit administration and serving solutions manager for Gate City Bank.
"There's more involved than just plugging it in and dipping your card," she said. "Retailers have to install special software and go through a certification process."
Fisher said the processors that merchants and financial institutions use for card transactions are a big reason for the delayed rollout. Many processors weren't ready on time or have been slow to change.
That's why customers may be asked to swipe their card even when a store has chip-reading terminals — the machine is ready, but the processor or store software isn't.
Banks generally wanted EMV as early as possible because of the liability shift, Fisher said. That's a big deal when card fraud topped $11 billion globally in 2012 and counterfeit card fraud was on the rise in America.
In countries that went to EMV, banks saw a 40 to 50 percent cut in debit card fraud, he said.