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Businesses, consumers prepare for credit card shift to smart chip

The magnetic strip, which is easy for criminals to steal information from, is being replaced by a computer chip. (FOX 8 Photo) The magnetic strip, which is easy for criminals to steal information from, is being replaced by a computer chip. (FOX 8 Photo)
NEW ORLEANS (WVUE) -

A deadline to transition to a safer credit card processor is looming over businesses, and many owners are unaware of how it will affect them. 

"I had no idea and now, as a business owner, I'm finding out I have all these new responsibilities," said Emily Cheramie, who owns Bleu. 

Her Old Metairie business is in its third year. But Cheramie, like many others, did not know about the Oct. 1 deadline credit card companies put on businesses.

"I definitely think it's going to benefit everyone. I just think that maybe they should have just done a better job of explaining that and preparing others and maybe making sure everyone was on the same page," she said. 

The deadline is for businesses to install smart chip readers in stores for customers to process credit card payments. The magnetic strip, which is easy for criminals to steal information from, is being replaced by a computer chip. 

"What that does is create a safer, harder to counterfeit card that is really all about protecting your credit card information from hackers," CreditCard.com Senior Analyst Matt Schulz said. 

Unlike magnetic strips that store and share all of the customer's information, the smart chip does not allow the business to get a customer's credit information and will only share the necessary information to receive an approval from credit card companies. If businesses don't install the chip readers by Oct. 1, the individual business could be held liable for fraudulent charges. 

Card holders will not be held liable if the information is stolen from a business that doesn't meet the deadline.  

Businesses will have to provide both card readers for the smart chip and magnetic strip until the strip is phased out. 

A majority of businesses are the ones paying for the new card readers. 

"For a small shop, it could be in the thousands of dollars," Schulz said. "For a giant company it could certainly be in the millions of dollars because there are a lot of moving pieces involved."

Steve McKean with the credit card service Table Safe recently installed the card readers at Dickie Brennan's Tableau. 

The system makes sure the card never leaves the customer's hand, protecting both the restaurant and consumer. 

"Fraudsters can copy this magnetic strip very easy," McKean said. "but this chip that is in here is extraordinarily difficult to copy."

"It's seamless, with all the hacking and fraud that is going on in retail, it's really a great protection for restaurants," Dickie Brennan's IT Director Derek Nettles said.  

Europe, Asia and South America have used the smart chips for years and drastically reduced credit card fraud. 

"Fraud plummeted greatly," McKean said. 
    
A recent poll showed that only one out of every ten Americans have gotten a new credit card with a smart chip.

Card holders will not be held liable if the information is stolen from a business which doesn't meet the October 1st deadline.  
     
If you want a smart chip card, Schulz advises you contact your credit card provider. 

Copyright 2015 WVUE. All rights reserved.

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