The new computer chips in consumers’ credit cards don’t just affect how retailers accept payments, but how government agencies accept credit card payments for fees, taxes, and merchandise. As of this month, if a consumer presents a card with a chip to a merchant (either private or public sector) and the merchant is only capable of reading the magnetic strip rather than the chip, then the merchant accepts the liability if fraud results from that transaction. An industry expert has written a piece in American City & County’s blog about how this shift in liability affects local governments:
…City and county governments have several options for how they respond to the October deadline.
Deadline is not a mandate
Although the deadline shifts responsibility for fraudulent credit card charges from the card issuer to merchants that haven’t begun accepting chip cards, state and municipal governments are not required to have EMV-capable point-of-purchase terminals installed by Oct. 1. Credit card companies’ switch to microchipped cards will be only about 70 percent complete by year-end, according to CreditCard.com, and the new cards will include magnetic strips as well as chips, so agencies’ existing point-of-sale terminals will remain viable for the foreseeable future. There is still plenty of time for city and county governments to research the issue and determine what timing is best for them to convert to new EMV card devices.
Cost could be an issue
In part, that decision involves evaluating how quickly budgets allow for an equipment upgrade. Basic EMV-capable pay terminals start at around $200 each and go up from there, so purchasing and installing new equipment can represent a substantial capital expense. Further, EMV conversion is more complex than simply unplugging a current card reader and replacing it with a new one. The transition requires new back-end code and a certification process that can take several months…
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