Stores prepare to upgrade credit card equipment

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Merchants and businesses that take payments by swiping credit cards will need to add new equipment by October to avoid being held liable for any fraudulent charges they line up.

Right now, those charges are covered by credit card issuers, but changes to processing agreements with companies like Mastercard and Visa mean that companies will need equipment that can handle EMV cards, which have a small chip on the side to improve security.

Businesses will need new payment terminals or equipment, and possibly new software, to process the EMV cards. Those upgrades can cost several hundred dollars each. But that cost might save money down the road if the cards deter fraud.

“We can’t force our merchants to make this switch, but we want to make sure we’ve done our best to educate them on what EMV is and how it will affect them and their customers,” said Carrie Everman, merchant services manager at Washington Trust Bank in Spokane. She said her bank has been calling, emailing, and mailing merchants about the need to make the switch to an EMV processing system

“It’s the shift in liability that’s going to kill them if they don’t switch,” Everman said.

Pat Nagel, co-owner of Idaho Camera, said there’s no other option than to upgrade payment systems for the company’s three Boise stores. While Idaho Camera hasn’t installed the new credit card readers yet, the cost won’t be too bad for the company since the company is moving to a new processing system.

“If you don’t switch over, rather than the banks being liable, the merchant’s liable if the transaction goes south,” he said. Nagel said Idaho Camera has had incidences of fraud that cost the company a lot of money.

EMV is an acronym for the credit card companies Europay, Mastercard and Visa. With EMV cards, merchants “dip” the card into a card reader instead of swiping a magnetic strip. That creates a series of numbers sent in with the transaction that changes each time the card is used, Everman said.

The EMV cards only improve security on in-person charges; they don’t affect online or catalog sales.

Jesse Ronnow, area manager of treasury management for Zions Bank in Boise, said many stores already have credit card terminals with “dipping” EMV readers.

“You probably have used an EMV terminal and not noticed it,” he said.

The EMV cards also have a four-digit PIN code, much like that of a debit card, that buyers can enter to authorize transactions. Everman said its important employees are trained in how to use the new credit card terminals.

“If you don’t educate your staff you might as well not have that new terminal,” she said.

While services agreements are requiring most merchants to make the switch to EMV terminals by October, gas station pump systems don’t face the shift in liability until 2017.