The chip card drama continues. Last year retailers were squabbling about having to install card readers at their cash registers to accommodate the wave of chip cards that banks were flooding the universe with. It’s ATM owners time to whine and crack open their wallets to meet the October 21 deadline by MasterCard to equip their ATMs with card readers capable of reading the computer chip embedded in newer debit and credit cards. They can choose not to comply, but doing so comes with a pricetag – liability shifts to them for losses due to fraud. Visa is expected to institute a similar liability shift next October.
So far that threat hasn’t put the fear into ATM owners who are showing no sense of urgency about getting on board. Consumer World reports that, nationally, only 33% of ATMs are chip-enabled.
That’s no small matter. “EMV protects ATMs from cards fraudulently produced through shoulder surfing and skimming. The real concern will still be ATMs that have not been outfitted with EMV as fraudsters continue to collect magnetic strip data and capture their PINS,” says Philip Andreae, vice president, field market at Oberthur Techologies, the leading EMV chip provider.
Consumer World Founder Edgar Dworsky is a bit taken aback. “With so many reports of criminals using skimmers to steal ATM card numbers, it is surprising that banks have been so slow in completing upgrades to their systems, whether or not required by the card networks.”
Why so little initial adoption? For one thing, cost. “It can cost an estimated $300-$3,000 to retrofit an ATM,” says Dworsky. That’s not insignificant for banks with massive ATM networks, or ATM owners at mom and pop stores, and other outlets.
Another possible reason, points out Dworsky, is that most debit cards don’t yet have embedded chips. In fact, he says that MasterCard reports that only one out of three debit cards are chipped, compared to 88% of credit cards.
What does all this mean for consumers? How will the chip-enabled ATMs work? Dworsky explains that chip card readers at ATMs can be one of two types, depending on the machine. The ATM will look the same, so don’t expect it look different from the old type. In one version, the card is completely swallowed by the ATM for processing, while in the other, the card goes partially into the reader slot. “In the latter case, the customer may be directed via a screen prompt to re-insert the card a second time. Users shouldn’t notice a delay in their transactions, however, as they do currently at retail stores,” says Dworsky.
No doubt, the sooner ATMs can read chip cards the better for consumers, it’s not a panacea. “While the introduction of chip card readers at ATMs is designed to improve security and reduce counterfeit card fraud, ATMs may still be the location of choice for criminals to inconspicuously install skimmers to steal card data from the magnetic strip that is still on cards,” says Dworsky. “Although crooks may be not be able to use any data they skim from chipped cards at an ATM or retail store with chip readers installed, they could still use the card number to make online purchases where no check of card chips is possible. In fact, ‘chip not present’ fraud like this is up 15% this year, according to Experian.
Dworksy says folks should find out whether the ATMs they frequent are chip-enabled by asking their financial institution or using the ATM locators at Mastercard.com and Visa.com.