Changes coming in the credit card industry will provide more security for cardholders, but more liability for merchants if they don't invest in new credit card processing terminals.
Representatives from Bankers' Bank of the West discussed upcoming changes in credit cards with a small group of businesspeople on July 15 at Pine River Valley Bank.
Cards with computer chips, instead of the magnetic strips on most of today's cards in the U.S., will starting being rolled out within the next year, most likely as current cards expire.
The chip cards are more secure than our current version because there is a different purchase code for each purchase, meaning data can't be stolen off the cards. If it is, it won't work.
The more advanced cards have reduced credit card fraud by 64 percent in Europe, explained Mary Ann Elliott-Supples, senior vice president with Bankers' Bank, which handles the credit card processing for Pine River Valley Bank.
The reason that the U.S. has lagged behind other countries in the new technology is that it requires an upgrade to companies' credit card processing terminals. A new terminal costs about $300.
But the upgrade will start to make financial sense pretty soon, even for the mom-and-pop business owners at last week's event.
That's because by October 2015, the liability for credit card fraud will fall on the merchant if they are still processing with the old technology.
So the new processing terminals won't be mandatory next year, "but that's an incentive," Supples said.
"You need to protect yourself, and you need to protect your customers," said Lynette Gregg, another representative of Bankers' Bank.
The bank also displayed a mobile processor that Pine River Valley Bank customers can use on their cell phones. A free download available with the service will compute tips and taxes and can track inventory and scan barcodes.