Have you received a new credit card in the mail lately? Did you notice a small silver chip on it? That chip isn’t just for looks. Starting October 1st all businesses will be required to comply with the new PCI standards for chip readers. This practice is to help protect consumers from frauds and eliminate as much federal liability for fraudulent transactions.
The magnetic strip on the back of credit cards can easily be copied. That is why you see news reports from time to time warning you of outside facing card readers. For example when you pump gas at the gas station all of the pumps are outside. That means that anyone has access to them at any time. Thieves can attach a small device that will copy your magnetic strip information and then they can make a new card with your account.
Although this doesn’t happen as frequently as it used to, it’s still a real risk. It was even the main story line of the movie Identity Thief starring Melissa McCarthy. She made her millions by copying the strip of stolen credit cards to make her own. When fraudulent transactions are made, the business is left looking for a way to pay for the goods or services sold. This in turn hurts the banks. Consumers are not on the hook for fraudulent transactions. It is the responsibility of the bank to pay the store.
But when big companies, like Target, have massive security breeches things get complicated. Banks do not want to pay millions of dollars to Target for a mistake made by them. Banks have since filed a lawsuit against Target for the fraudulent activity. For a big company like Target, they can afford to fight the lawsuit and get the money for their products sold. But for an independent business, all it takes is one fraudulent shopping spree to cripple their profits.
Cue the credit card chip. These tiny chips will now protect businesses from owing money to banks for fraudulent transactions. The chips are virtually impossible to steal and duplicate. On October 1, 2015 any business that accepts credit cards as a form of payment will be required to use chip readers. If a business decides not to use a chip reader, then they will be responsible for ANY and ALL fraudulent charges and payments.
These chips are designed to protect businesses and the consumer. It is the latest way to fight the ever-evolving hacker and protect everyone’s money. If you have not had a chip reader installed at your company, do so soon! Even if you take credit cards over the phone, the chip reader will still protect you. If you have further questions about PCI compliance or chip reader, contact us!
