Derek Hatchard writes on the theme of "improving experiences" which includes managing technology, user experiences, life hacking, and some business related stuff. Derek has a software development blog at ardentdev.com and a product review site at wellrated.com. He is a Principal Member of Technical Staff (PMTS) at Radian6, a salesforce.com company. All views expressed are his alone (or those of any guest writers) and do not represent the views of Radian6 or salesforce.com.

The Chip in Your Customer’s Pocket

Chances are good that you already have a credit card with a microchip in it.  Transactions using the chip require you to enter a PIN rather than signing a receipt.  It steals from you the tactile pleasure of scrawling your chicken scratch on a scrap of paper, but otherwise the new system is intended to be less susceptible to fraud.

Starting in October 2010, Canadian merchants without point of sale systems that accept the microchip-based credit cards from Visa and MasterCard will assume liability for fraudulent transactions if a chip-based card was presented.

Credit card fraud in Canada is over half a billion dollars per year.

visaThat means if Joe’s Shake Shack swipes the magnetic stripe on a chip-enabled credit card and the transaction is later reported as fraudulent, Joe takes the loss.

My personal and business credit and debit cards all have chips in them.  What has surprised me is how often I have seen vendors struggle with chip-aware point of sale machines, frequently falling back to the swipe + sign method because they cannot get the card reader to work.  The information I’ve seen states that the credit card companies will also hold merchants liable for fraud in cases where the chip + PIN was not used successfully in a transaction because of inadequate staff training.

Canadian business owners, take heed.  Visa and MasterCard have half a billion reasons to shift as much liability to you as possible.  Bite the bullet and get your systems upgraded.

(photo courtesy of Ingorrr)


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2 Responses

  1. Kirill says:

    Wow this is going to be super game changing now that the liability has shifted from the credit card companies to the businesses. Can’t wait to see what type of impact this has come this winter.

  2. da ve da says:

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