How will retailers deal with future credit card fraud?

With the start of October, the standard in the use of credit cards will be those with an EMV chip imbedded in the card. Credit and debit cards will still have a magnetic strip with them, but they will be used differently. Instead of swiping the cards, they will place the card in a reader that will identify the chip and approve the transaction after the customer enters a pin.

The change is designed to cut down on fraud, and comes on the heels of similar cards being implemented in Europe over the past decade. Essentially, it is supposed to be substantially more difficult for fraudsters to hijack the information on a person's credit or debit card by using the chip. According to a recent LA Times.com article, fraud in the United States has doubled over the last 15 years, but in other parts of the world where chips have been implemented, fraud has been curtailed. 

While large merchants, such as big box retailers Best Buy and Bed, Bath & Beyond are ready for the change with chip reading terminals, many small businesses are not ready. Many indicate that the cost of the new terminals make the change cost prohibitive. But they run the risk of being held liable for fraudulent charges made on cards that they accept.

It remains to be seen how potential lawsuits may be resolved in the event a merchant learns that they have accepted fees from a card later found to be counterfeit, but it is likely an issue that retailers and banks will have to deal with until all debit and credit cards have security chips. 

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