Credit and Debit Cards with chip are here

Credit and Debit Cards with chip are here

Bend bike-store owner T.J. Jordan is ready for the future and the future arrives.

That’s the deadline that major credit card companies have set for merchants to have the equipment available to handle transactions by customers with EMV credit and debit cards.

EMV cards, for Europay, MasterCard and Visa, contain a microchip that encodes each transaction, hopefully to ward off fraud and theft of credit card data. Also known as chip-and-pin cards or smart cards, they are in use across the globe, with the exception of the U.S.

Jordan, owner of The Hub Cyclery, at 1001 NW Wall St., installed an EMV card reader when he opened for business. The devices will soon be mainstream, his merchant services provider told him at the time. So he went ahead and installed one.

The card reader also accommodates the magnetic-stripe cards that most Americans still typically carry. Tourists from Europe and Canada are using EMV cards for all of their transactions, Jordan said. For the past three months, about half of the U.S. cardholders who make purchases in his shop are using smart cards.

High-profile reports of credit card data breaches at big retailers such as Target and Home Depot, a high rate of credit card theft in the U.S. and other factors prompted card companies, the banks that issue them and merchant service companies to adopt EMV technology.

As EMV cards became the norm worldwide, credit card fraud became more difficult to pull off. But it became more commonplace in the U.S., where that technology was not in widespread use, according to a February report in the Wall Street Journal. About half of all the world’s credit card fraud occurs in the U.S., the newspaper reported.

“Fraud does happen. Things like EMV are opportunities to combat that,” said Debbie Amerongen, executive vice president at Bend-based Bank of the Cascades and director of distribution strategies. “Customers need to know that.”

Bank of the Cascades is working with its merchant services provider, Elavon, the company that facilitates credit card transactions for the bank’s merchant account holders, to get the word out. Elavon directly serves more than 1,500 global financial partners, but they are not all banks, said Holly Maddox, a spokeswoman for the company.

Liability for fraud that occurs in a credit card transaction will shift to the party in the transaction that has not adopted EMV technology, whether it’s the bank or other card issuer, the consumer or card holder or the merchant. For example, banks that fail to make EMV cards available or a merchant that fails to acquire a card reader and PIN pad for EMV cards will be liable for the loss that occurs when someone uses a stolen credit card number to make a purchase, said Kim O’Connor, Elavon vice president for new product innovation.

“That’s why the liability shift in October is such an important date for merchants,” she said Thursday.

Amerongen said Bank of the Cascades is reissuing its MasterCard credit and debit cards to 75,000 account holders in two phases, the credit cards this summer and the debit cards later in the year.

One of the largest U.S. banks, Bank of America, started issuing EMV-type credit cards, said bank spokeswoman Betty Riess. It has began issuing chip cards for all its new and reissued debit cards for consumers and small businesses.

“We were the first major bank (in the U.S.) to add the chip to debit cards,” she said.

Wells Fargo bank began issuing EMV credit cards in November and plans on rolling out chip-enabled debit cards later this year, said bank spokesman Tom Unger.

“Any customer can always call if their credit card is not up for renewal and they want a chip-enabled credit card,” he said Friday.

Wells Fargo has already supplied thousands of merchants with EMV-capable terminals, Unger said.

Elavon began its campaign to supply the merchants it serves with EMV card readers, O’Connor said. In October, it upgraded the software.

A random check of about 10 businesses in Bend on Thursday found managers and employees with a wide range of familiarity with the coming switch to EMV chip cards, from a vague knowledge of EMV to having contacted Elavon about acquiring an EMV card reader. Only Jordan, at The Hub Cyclery, among those contacted, had a working EMV terminal.

Wendy Sexton, of Trivia Antiques and Appraisals, 106 NW Minnesota Ave., said she expects to acquire a terminal soon. .

“I’m not entirely convinced” of any technology’s ability to stem all fraud, she said. “And don’t know that I ever will be.”

According to Elavon, the EMV chip card works in two ways. One, during each purchase it generates a code specific to that transaction. Two, it creates a new three-digit card security code for each transaction. Magnetic-stripe swipe cards carry just one three-digit code, printed on the back, as an added security measure against fraud on all transactions. The EMV cards, however, offer no better protection than magnetic-swipe cards against data theft or fraud during online purchases or those made over the phone, bank representatives said.

Cardholders will have an option to use either a personal identification number, or PIN, or a signature with their new EMV cards, O’Connor said. Small purchases, such as drive-thru food or coffee, will probably require neither a PIN nor a signature, she said.

“It really helps reduce fraud because the card can’t be duplicated,” O’Connor said, “the way a magnetic-stripe card can.”

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