Starting on Oct. 1, 2015, grocers became financially responsible for fraudulent transactions when a counterfeit credit card is used at their stores’ checkout lanes. Prior to that date, the bank issuing the plastic took the loss.
Why the shift in liability to U.S. retailers? It was part of the change for merchants upgrading their POS terminals to accept Europay Mastercard Visa (EMV) cards that have an embedded microchip – a small metal square on the front of the card that adds a higher level of security to the transaction when used in chip-enabled terminals.
Such new technology is wonderful because it protects consumer data better than a card with a magnetic stripe. But here’s the problem: Not enough checkout terminals in grocery stores around the country are EMV-compliant.
In a recent article in the Cleveland Plain Dealer newspaper, Randy Vanderhoof, executive director of Smart Card Alliance, says, “Many grocers are using computing platforms built on older, proprietary technology, so making changes to those systems is quite challenging.”
The executive director of the national not-for-profit association that advocates smart card technology goes on to say that many chains operate 24 hours a day with several stores having more than a dozen checkout lanes. “It is more challenging to perform major upgrades without risking disruption for employees and customers.”
In this “Money Matters” article, columnist Teresa Dixon Murray was answering a question from a reader who complained that her local Giant Eagle supermarket had new readers installed for the EMV card, but they were not ready to be used.
I live in Cleveland, so it was easy to personally validate this lack of EMV compliance. The EMV terminals were indeed in place at my local Giant Eagle, but they were not operational. A spokesman for Giant Eagle acknowledged: “We are actively working to finalize plans to implement a seamless companywide rollout of an EMV-enabled system, and anticipate that the transition will be complete in the coming months.”
To find out the status nationally, I checked with the Food Marketing Institute, the national association of grocery chains. Hannah Walker, FMI’s payments expert, said most small operators and very large chains are EMV-compliant, but added that many grocers in the middle have either not installed or not activated their EMV terminals. Doing so in the fourth quarter of last year would have been too disruptive because holiday shopping makes it the busiest season of the year. But she said these grocery chains are working hard to be compliant by mid-year.
I hope so, mainly to avoid the financial liability of a fraudulent transaction. Meanwhile, shoppers who have EMV cards can use them by swiping them like before. That’s because the new cards still bear the standard magnetic stripe, which is easily forgeable. When I asked Walker when cards would only have the microchip on them, she said it was a "good question."