STORES Magazine - April 2015 - (Page 39)

n FINANCE EMV Ahead Are retailers ready for the looming October deadline? by LAURI GIESEN R etailers may hear the faint sound of a clock ticking. It's part of the countdown to the credit card industry's deadline for merchants to be ready to accept new chip-based cards - or face increased liability if the cards are used fraudulently. Payments experts say a lot of retailers won't be ready by the October 1 deadline. Reasons range from ignorance about the mandate to justifying the implementation costs to a heated debate between retailers and the card industry on whether the new cards will provide all the security they could. At issue are Europay MasterCard Visa cards, which will replace the easy-to-copy magnetic stripe currently used to store card data with a difficult-to-counterfeit computer microchip. Unlike EMV cards in the rest of the world, however, the cards most U.S. banks will issue have consumers signing for purchases rather than requiring a more-secure personal identification number. The lack of a PIN is a matter of contention because of the change in card company rules on who is liable when a credit card is used to commit fraud. Under current policy, the bank is held responsible for guaranteeing cards are legitimate; they cover costs if cards are counterfeit. Retailers are responsible for verifying cardholder legitimacy; they pay fraud costs if that's not the case. NRF.COM/STORES Under the new system, if a retailer accepts a chip card but doesn't have a chip reader, the bank will no longer bear responsibility for fraud if the card is counterfeit, shifting the burden to the retailer. If the fraud is on the user side, the retailer maintains responsibility. National Retail Federation Senior Vice President and General Counsel Mallory Duncan says that's not fair, because banks are adding a chip Retailers must train staff and customers on handling EMV transactions, where cards are "dipped" into the reader rather than swiped. that makes the card hard to counterfeit but refusing to add the PIN that would ensure user legitimacy. Retailers are being required to cover the $25-$30 billion cost of the new equipment. "Why are they making us buy equipment that can do both, but refusing to do what they do in Europe and set up a system that does both?" Duncan asks. "If they're going to make us spend that kind of money and contribute to fixing the part they bear responsibility for, why not fix the part that we bear responsibility for?" New card terminals can cost $1,000 or more; Duncan says some merchants are weighing the expense against the number of chip cards they are likely to see. A January survey found only 31 percent of consumers had a chip card; with the average American holding four cards, Duncan says that translates into only about 8 percent of cards being chip-enabled. The new cards are being pushed largely in response to recent high-profile data breaches; Duncan notes that while the cards make it difficult for criminals to use stolen data, they do not prevent data theft itself. Consequently, some retail companies looking to avoid the negative publicity of a data breach might instead invest in methods to stop breaches like end-toend encryption or data tokenization. STORES April 2015 39 http://www.NRF.COM/STORES

Table of Contents for the Digital Edition of STORES Magazine - April 2015

A Most Complex Game
It's All Connected
Retail People
Selling Satisfaction
Editor's Page
President's Page
Retail Politics
NRF News
NRF Communities Update
End Cap
Business Operations
Online Fraud

STORES Magazine - April 2015