S.C. merchants moving to meet Oct. 1 deadline for new credit cards

South Carolina merchants face a looming national deadline to upgrade their credit card technology or possibly become financially liable for any fraud that takes place because of a commercial transaction at their businesses.

Beginning Oct. 1, responsibility will shift to individual merchants for liability from fraud if they have not installed equipment to read EMV chips in credit cards.

The new card readers are designed to read what are known as smart cards. Those are credit, debit and bank cards that feature a highly-secure technology that is embedded in the cards via an integrated circuit chip that can read, write and store encrypted data more securely than standard cards that feature only a magnetic stripe. The EMV chip can also validate authenticity with the authorizing card networks during the actual transaction.

The result, experts say, is that each payment transaction has a unique footprint that cannot be duplicated. But for the technology to work, merchants must have the up-to-date equipment. Cardholders must also have credit and bank cards with the EMV chip in them.

The Oct. 1 deadline for EMV chip readers was set by an executive order issued by President Obama in October 2014.

EMV stands for Europay, Mastercard and Visa, which are the three international card companies behind the migration to a more secure set of specifications for smart card payments and smart card readers. But, how the new upgrade requirements are implemented depends on the company each merchant uses for its card services, said Dave Carlton, president of the Charleston-based Priority Payment Systems Independent Sales Organization.

“This requirement is being put in place for every merchant account in the U.S.,” said Carlton, whose company processes credit cards and supplies credit card equipment, such as the new EMV card readers, along with technical support to clients.

“Our (sales organization) is upgrading all of our existing merchants to the equipment at no charge, and all new accounts through Oct. 1 will be provided with the EMV and contactless payment ready terminals to use at no charge for as long as they are using our services,” Carlton said.

Some companies, however, are using the Oct. 1 deadline as a sales tool, Carlton and local Columbia business owners say, charging existing clients for the upgraded card reading equipment and doing heavy telemarketing to convince merchants to switch equipment providers.

According to some statistics, there are as many as 1.8 billion credit and debit cards in use in the United States and most new card readers issued in the past five years are fitted with the EMV capability, industry statistics say. The new card readers can be distinguished from traditional card readers because the new smart cards are not swiped, but inserted through a slide at the bottom, or foot, of the readers.

U.S. businesses have been far behind the curve in converting to the EMV smart card readers, but South Carolina businesses might be in good shape, according to the South Carolina Bankers Association and some of its members. That’s true in part because banks and card issuers have doggedly informed customers through mail and other means of the impending changes, and assisted their business customers when needed.

A poll by Wells Fargo & Co. released earlier this month showed that only 49 percent of small businesses nationally that use card readers were aware of the deadline. A separate national poll also showed roughly one in 10 American consumers have a smart card.

In South Carolina, merchants contacted by The State said they have the new machines.

Michael Bank, owner of Capital Karate on Rosewood Drive, where he sees 400 students each week, said he got the EMV chip card reading technology a few weeks ago. “The biggest thing about it is it takes more time for each transaction,” said Bank, who has operated the business for nine years.

Brian Stockard, who owns The Cigar Box on Rosewood Drive and on Main Street downtown, said both his shops have the EMV card reader technology. “My merchant service is very aggressive in making sure we have the card readers,” Stockard said. “They let us know we needed to have them and needed to have them in by a certain time.”

One location received the readers in June and the other in July, he said, at no extra cost. Stockard said he had paid plenty for the point of sale program, which landed him the card reading equipment, and his equipment was new enough that it only needed an upgraded card reader to be ready, he said.

Cam Gee, store manager at Rosewood Liquor and Wine, said the company has had the technology in place since the business opened about a year ago.

“We are updated,” said Gregory Gibson, owner of Gibson Jewelers on Rosewood Drive in Columbia, who said he has had the EMV chip reader for a week. The machine came with a $300 price tag, Gibson said, and his bank told him he had to have the equipment by Oct. 1. The new readers operate the same as the old ones, said Gibson, who has been in business in the same location for 25 years.

“The worst part of the whole thing is we get about five calls a week from people soliciting credit card processing, which is crazy. It wastes our time and if you tell them ‘no, we’re not interested, they get aggravated and mad – a waste of a bunch of our time.”

This story was originally published August 22, 2015 at 7:32 PM with the headline "S.C. merchants moving to meet Oct. 1 deadline for new credit cards."