US credit card companies have started switching its users to EMV cards, encouraging businesses to do the same.
EMV, which stands for Europay MasterCard and Visa, should help protect consumers from fraud by sending out a one-time code to complete the transaction. Its predecessor, the magnetic strip, sends out the same code every time.
Consumers’ process at the register has also changed. Instead of swiping, users will insert the card’s new chip into a reader, waiting five to 10 seconds for the payment to go through.
Card companies gave retailers until October 1 to make the switch, but on September 30, when the Troubleshooters asked shoppers about the new chips and chip readers, many had no idea how they work.
“I’ve seen it been done, but haven’t been doing it [myself],” said Kyle Dedabo.
“I’ve heard it,” said Tia Wilkins. “I’m not real clear on it, but I’ve heard it.”
After October 1, retailers will be on the hook for any credit card fraud that does occur, rather than banks.
That prompted companies like Target to activate the new technology, after the 2013 data breach that compromised as many as 70 million credit and debit cards.
“Target was really looking to make sure all of our guests who came through the door were protected,” said Adam Wood, who manages New Britain’s Target store.
But experts like NerdWallet’s Sean McQuay say consumers shouldn’t expect all retailers to make the switch right away.
“We are seeing a lot of the big national chains upgrading, but we’re not really seeing that trickle down to the small and medium businesses,” said McQuay.
That slow trickle could cause problems, McQuay adds. He says the chips are only effective when its universal. Otherwise, fraud could actually go up. When the United Kingdom launched EMV readers between 2004-2014, credit card fraud increased by 120 percent.
“Fraudsters basically want to get it while the getting’s good,” said McQuay. “And they recognize they have a limited ability to do so.”
The Troubleshooters wanted to see how many major businesses use EMV readers. While all eight stores we visited have the card readers installed, only half of those stores—Home Depot, Walmart, Target and Old Navy—had them activated.
Trader Joe’s, CVS, Whole Foods and Toys R Us did not.
We reached out to those four companies. CVS says all of its stores will accept chip card payments before the end of October.
Toys R Us says it is finalizing the testing process and expects to rollout the new software to all Toys R Us and Babies R Us stores in the near future.
Regardless of how long the process takes, keep in mind no fraud protection is guaranteed.
“On top of having the chip card, make sure you store it in a safe place [and] make sure you’re not giving it to somebody who is not authorized to take that,” said Wood.
Also, make sure you remove your credit card from the chip reader when you’re done. The new method takes a few seconds longer than the old one.