Chip cards? Small business owners unaware of planned changes

Wells Fargo & Co. has found that more than half of small businesses owners don’t know…

Retailers like Target have to use using card readers by October 2015 to avoid liability, as major credit card companies like Mastercard will no longer hold themselves liable for security breaches at stores without chip-based card readers at that time.

A new poll of 1,004 US consumers also reveals that only about one in 10 have received a chip-enabled credit card and, of those who have received the cards, only one third have used them. If businesses don’t support the chip technology by then, they will be liable for fraudulent charges from point-of-sale card transactions. Among small businesses with POS card payments, only 31 percent say their existing credit card processing system supports chip-enabled cards. The goal is for all magnetic stripe cards to eventually be replaced.

Small business owners also share divided opinions as to whether the liability shift will reduce fraud: 42 percent say it will boost protection from fraud, while 42 percent feel the opposite. Thirty-four percent plan to upgrade in the future, and 21 percent said they don’t plan to get the new readers.

Forty-six per cent of owners who don’t plan to get new readers by the deadline said they don’t want to pay the costs for buying and installing the equipment and software, which can run into thousands of dollars.

Only 49 percent of respondents on the Wells Fargo survey even knew about the pending liability shift.

Many large retailers have already swapped out their card reading systems.