As the deadline to transition to new chip card readers passed nearly one year ago, many businesses continue to check out customers without the added protection.
U.S. merchants were supposed to start using chip card readers, replacing the old magnetic strip method, by October 1, 2015. According to Visa, only 28 percent of U.S. merchants currently support chip payments.
Some in Kansas City have noticed.
"I feel like a lot of stores I've been in, their chip reader doesn't work,” said one shopper in Brookside Wednesday.
“It's so different between store to store, so I just wish they would get that standardized,” said another.
41 Action News went into several Kansas City stores and found many that have chip card readers that don’t currently function.
Panera Bread’s scanner read, "Chip card functionality coming soon."
Price Chopper’s read, "Chip reader not active."
And Hen House had readers that read, "Chip not in service."
"The problem is that the card industry has to come out and certify these installations before they can be put into use,” said Craig Shearman of the National Retail Federation.
Shearman said the credit card industry has dropped the ball. While most merchants have the technology to accept the new chip cards, many wait six to nine months for the software to be installed and certified. The move to not use chip card readers after the installation is risky for businesses, not consumers.
"If the chip card turns out to be counterfeit and the retailer does not have a chip card reader, then the retailer eats the fraud cost,” said Shearman. "The consumer by and large is totally insulated from fraud. Under federal law, a consumer is only ever responsible for up to $50 of fraud cost and in most cases the card company will waive that."
Some businesses are opting not to use the chip card readers because of the expensive cost. Others choose not to because of the lengthy wait times for each transaction.
"There's a big difference in the time checkout,” said Casey Simmons, owner of “Stuff,” in Brookside.
"In hindsight, had the swipe been an option to stay with, we would have stayed with it,” she said.
The new chip cards are made to prevent counterfeiting. However, without inserting a pin, they don’t add much further protection than previous credit cards, especially for online shoppers.
According to Visa, fraud is down 35 percent compared to last year.
Shearman said they expect 86 percent of retailers to have new chip card equipment up and running by the end of the year.
“Eventually all retailers will switch to this. It’s just a matter of time,” he said.
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Josh Helmuth can be reached at josh.helmuth@kshb.com
