By Vicky Taylor Public Opinion, Chambersburg, Pa.
A revolution is underway in the credit card industry across the country, one that proponents of the new chip-enabled card technology say will make consumers sleep easier at night, reassured that it is becoming harder and harder for thieves to steal their personal information.
Some local merchants, especially small businesses, are finding the transition to the new technology burdensome, however. And some appear to not understand all the issues connected to the switch to the new technology.
Christine Travers, who owns and operates Root 30 Hair Designs of Chambersburg, said she has realized the advantages to the chip-enabled cards but has not invested in the new machine required to accept those cards yet.
"It is expensive, especially for a small business such as mine," she said.
Chambersburg's Council for the Arts still doesn't have the machine, in part because of the expense, but will eventually get it, according to gallery coordinator Anne Finucane.
Mike Carty, owner of Lotus Moon Gallery and Yoga in downtown Chambersburg, said he got his card-reader machine to accept the chipped cards last year, but so far he hasn't had a single customer come into his business with one of the new cards.
The cost of his machine is included in the fees he pays for the privilege of accepting the new cards.
"I didn't pay for it outright, but obviously nothing is free," he said. "It's just something you have to take into consideration when you price things."
Bill Harding, who with wife Dotty owns D'Italia, a downtown eatery, doesn't have the new machine and doesn't plan to get it until absolutely necessary.
He sees several issues with the new technology, especially for restaurants and other establishments where patrons usually want to add a tip to their bill.
"My (point-of-sale) company still hasn't figured out how to handle tips yet," he said.
The cost of the new machines appears to be the main complaint of small businesses that have not yet made the switch to the new technology needed to accept the cards. Some say they just can't afford it at this time. Others are taking a wait-and-see stance before investing in it.
"It's a lot of money for a small business to put out," Travers said.
Called EMV technology (short for Europay, Master Card and Visa -- the big card companies pushing it), the new card technology provides the merchant with an encrypted code to transmit to the issuing bank, instead of the actual credit card number and other information found on magnetic stripe cards.
Consumers insert their card in a slot and it has to remain there until the transaction is approved, as opposed to "swiping" the magnetic strip cards.
For those businesses that do have the machines and can now process the chip technology, it has apparently been pretty smooth sailing.
"It takes longer to process (the chip cards)," said Penny Shaul, owner of Here's Looking At You, a downtown Chambersburg boutique and women's clothing store. "But that hasn't particularly been a problem."
The Heritage Center run by the Greater Chambersburg Chamber of Commerce has also been accepting chip-enabled cards in its gift shop.
While national companies who watch such issues, like CreditCards.com, say about 120 million Americans have already received new cards with the new chips embedded in them, many still don't have the cards yet.
"So far, I haven't had one customer hand me a chip card," he said. "When people do come in with it, I'll be able to take them though."
That might be in part because some local banks still haven't sent the new cards out to their customers.
F&M Bank of Chambersburg still hasn't issued the chip-embedded cards to it's 30,000 card holders but hopes to do it sometime between November and early spring, according to Matthew D. Weaver, the bank's senior vice president of marketing and corporate communications manager.
He and Ronald L. Cekovich, senior vice president and technology services manager, praise the technology and said the bank is dedicated to providing its card-holders with the added layer of security that the chip creates, even though the new cards are about four times as expensive to issue as the old magnetic stripe cards.
"It's expensive, but our most important concern is to provide our customers with the latest, most secure products possible," Weaver said.
While the technology is new to the U.S., European banks and merchants have been using it for at least five to seven years, Cekovich said.
New rules governing credit card liability for fraudulent purchases are changing along with the technology, Weaver and Cekovich said this week.
On Oct. 1, the rules changed drastically, relieving banks of responsibility in fraud cases if the merchant has to swipe a chip-embedded card because it doesn't have the machine meant to handle the cards, which now have both the chip that encrypts the customer's card information and a magnetic strip that transmit the information the traditional way.
Banks such as F&M will still be responsible for reimbursing consumers for fraudulent card-use until they switch over to the new chip technology.
Once that happens, however, it will be the merchant's responsibility to get the new machines and use them.
In Europe, credit card fraud dropped dramatically once banks and merchants began using the new chip technology, Cekovich said.
In fact, almost all credit card fraud instances in countries that have been using the chip-style cards are the result of online transactions where the card isn't physically used with a reader, he said.
In those cases, a consumer types the credit card number and, often, the three-number code on the back of the card into the line on the merchant's online form. That gives hackers who might get into the merchant's records all they need to make fraudulent online purchases.
In those cases, under the new rules, the responsibility for reimbursing the consumer is on the merchant.
"It shifts the focus and hopefully provides an incentive to merchants to go ahead and invest in the new technology," Cekovich said.
Weaver said F&M is trying to be proactive with the new technology, especially when it comes to educating both consumers and merchants to the importance of it.
"It's important to us for our merchants to understand the technology and the implications of not having this technology," he said.
He and Cekovich said they sometimes don't understand the way the cards work or the liability they will face if they continue to swipe the card's magnetic strip instead of having the ability to use the chip part of the card.
"Talk to someone about it," Miller urges local businesses who might be thinking about taking a chance on their older swipe-only machines. "Yes, it's an expense but the added layer of security (to consumers) is vital."
Mike Carty agrees.
"I understand the need for it," he said. "It's something you just have to take into consideration when you set your prices."