SPECIAL REPORT: Credit card chip reader safety

A customer uses his card at Mill Mountain Coffee and Tea in Salem. (Picture: Annie Andersen)

ROANOKE, Va. (WSET) -- Credit card chip readers.

Love them or hate them, they're here to stay. The new EMV readers mean more security, but in some cases, they also take longer than the older swipe cards.

Each day $4.5 trillion process through the nations payment systems, the majority of that being cash.

“Debit from a preference standpoint is really the top preference standpoint for a lot of age groups, but cash is still really number one, after debit, probably credit, explained David E. Beck, the Senior Vice President and Regional Executive for the Federal Reserve Bank of Richmond.

However, a Lexis Nexis study says that fraud on cards amounts to 190 billion dollars annually.

Jason Oxman is the CEO of the electronic transaction association, the global trade association representing more than 500 payments and technology companies

He says that’s why the new chip cards are important.

“The chip cards prevent counterfeit card fraud. So we’re seeing it wipe out billions of dollars of fraud across the country, Oxman pointed out.

That’s because that little chip in cards is actually like a tiny computer. Oxman explained, “It generates a unique or one-time security code every time you use your code. That’s different from the magnetic stripe card which used the same security code every time you use the card. That makes it impossible for a criminal to use stolen account numbers to create a counterfeit card.”

But over at Mill Mountain Coffee and Tea- district manager Devan Ritchie says that benefit doesn’t outweigh the negative.

“Switching to the chip readers was really detrimental actually. Our ticket time increased by minutes, not just seconds. We could have an entire line of customers served, but they’re still waiting just to get rung up,” said Ritchie.

Oxman says that’s a common complaint, and one credit card companies are working on.

“We’re actually deploying new software solutions to get that time down to about the same time as the mag stripe card transactions,” said Oxman.

But Ritchie says it’s too little, too late. He added, “We’re going to use the Square readers and use the square stand and just use the swipe processing that they offer.

The same can’t be said at Homestead Creamery where they have had their chip readers for about 7 months and love them.

“It’s been going great, it really has. We still have a lot of people that don’t have the credit cards that accommodate that, but it works fine. It’s fast, it’s actually a little bit faster than the other system,” said Michael Grisetti, the Vice President of Operations for the Franklin County based creamery.

Even more than the convenience, Grisetti explained he wants his customers to feel secure.

“In the world we live in today, with all the things that are going on, it makes you feel a lot better to have that security.” Grisetti added, “It makes you feel better about your customers too- for your customers. Because we wouldn’t be doing anything with that data, but it’s good to know that it is secure.”

A Year Into The Era Of Chip-Embedded Credit Cards

But with only about 35% of stores having chip readers, what does that mean for shoppers?

Really, nothing.

Oxman explained, “You have no liability for any fraud, even if a criminal figures out a way to duplicate that magnetic stripe, you still have no liability, whether you use the magnetic stripe or the chip in your card.”

However, for retailers, only having a mag stripe can mean big bucks.

“Merchants that upgrade to chip readers don’t have any liability either. Those merchants that haven’t yet could have liability for counterfeit card fraud,” warned Oxman.

That’s partially why Homestead Creamery upgraded.

“It would devastate us. You know, at our size, it would devastate us. You’re right. We put a lot of small volume upstairs and if any of that information got in the wrong hands, we wouldn’t appreciate it- that’s for sure,” said Grisetti.

At Mill Mountain Coffee and Tea, that’s a risk they’re willing to take in exchange for speed. Ritchie said, “We’re just opting away from it entirely. We’re going to streamline the process and take the chance of a $4 charge back.”

But there’s a third option- and it’s actually the most secure out of all of them.

“It’s really good to have multiple layers of security and that’s where some of the mobile technology with the thumb prints and the other features, geolocations of where your phone is, whose phone it is, some of those can be added in to payments to provide additional security,” explained Beck.

Not only is it secure, by using mobile payments, shoppers can avoid chip readers.

“When they upgrade to chip readers, they can now accept mobile payments as well. The technology in the chip card reader is the same technology as you use to accept mobile payments. The mobile payments services like Apple Pay and Samsung pay and Android Pay, well they use the wireless form of the chip that’s in your card,” said Oxman.

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