3 On Your Side
CONSUMER ALERT

Why aren't retailers equipped to take your chip card?

Posted: Updated:
Transactions made with chip cards are more secure than made by swiping a magnetic strip. (Source:  David Hughes via 123RF) Transactions made with chip cards are more secure than made by swiping a magnetic strip. (Source: David Hughes via 123RF)
Implementation of the technology has been slow because the banking industry has to certify the equipment. (Source: Nithid Memanee via 123RF) Implementation of the technology has been slow because the banking industry has to certify the equipment. (Source: Nithid Memanee via 123RF)
Retailers might have chip-enabled machines, but if they have not been certified, you will have to swipe your card. (Source:  tuthelens via 123RF) Retailers might have chip-enabled machines, but if they have not been certified, you will have to swipe your card. (Source: tuthelens via 123RF)
Chip cards are meant to be dipped rather than swipe. The transaction takes a little longer, but it more secure. (Source: Anton Gvozdikov via 123RF) Chip cards are meant to be dipped rather than swipe. The transaction takes a little longer, but it more secure. (Source: Anton Gvozdikov via 123RF)
(3 ON YOUR SIDE) -

Drop into a little Central Phoenix restaurant called Pizza Heaven and you'll find customers lined up to buy that next fresh-baked pie. 

When it's time to pay, you'll that find customers don't mind handing over their debit or credit card. That's because Pizza Heaven has updated its hardware to accept chip cards, which are more secure for consumers.

"It's been good. I don't see too much of a difference, but it's been good," Patti Hasbun, the owner and operator of Pizza Heaven, said.

Hasbun decided months ago to upgrade her terminal and software to process the new and improved chip cards.

Many other merchants have done the same thing. In fact, some Valley retailers proudly boast that they are chip-friendly.

But according to www.CardHub.Com, 42 percent of retailers have not upgraded their systems.

You'll know you're using the less secure traditional payment method when you're asked to swipe your magnetic strip to pay for something.

Consumers like Steve Williams says it's frustrating when he's ready to use his chip card, but the merchant wants a swipe instead. 

"The issue I run into is where they're chip-enabled, but the device at that particular register is broken, and they don't tell you," Williams said. 

Sometimes they do tell you by posting a little sign on their card processor indicating "no chip."  What that means is the establishment will still take your "chip" card and swipe it, but the transaction isn't as safe and secure as a chip-enabled processor. 

"Consumers are frustrated.  Retailers are frustrated,"  said Ken Colburn, a computer and technology expert with Data Doctors here in the Valley.

He said chip cards are safer because they create a unique transaction code for each transaction. That code can only be used once, so if a hacker got his or her hands on it, it would be useless.

What's more, because the chip on the card contains encryption, it is difficult to make counterfeit cards. That security for in-person transactions is the main reason for the change. Swipe cards are easy to replicate because your account information is just sitting there on the magnetic strip, available to anybody with a $20 skimming device.

The change to chip cards has taken time. The U.S. is one of the last countries to make chip cards the standard. European retailers have been chip technology for years and have seen a significant decline in credit-card fraud.

Colburn says the next time you see a sign saying "no chip," don't get mad at the retailer. He explained that it's likely that the merchant upgraded to a chip-enabled processor, but the machine just hasn't yet been certified by the banking industry.

"Part of the problem is that there is a logjam of companies trying to get their code certified," Colburn said.

In other words, when the banking industry encouraged businesses across the nation to be chip-ready by last October, many establishments rushed out and upgraded at once, like Pizza Heaven.

But the very industry that demanded the upgrade can't keep up with certifying the installation of the hardware. That means the processor may have been installed, but until it's actually certified by credit-card companies and given their blessings, you'll still have to swipe your card. 

"That retailer is doing what it's supposed to do to make sure these safe transactions occur, but they're waiting on someone else that that they don't have any control over," Colburn said.

RELATED: Retailers scramble to meet scrambling "chip" credit card deadline Oct. 1 (Sept. 28, 2015)

Hasbun says she feels fortunate. Her restaurant's equipment has been certified, which means no swiping is done at her restaurant, and those chip-card transactions are all done securely.   

"What about psychologically knowing that it is a chip reader, and you and your customers are less likely to get ripped off," I asked.

"Probably, yeah," she answered. "It gives us a peace of mind a little bit to know that at least the customer knows that they are safe."

Colburn and I hosted a Q&A on Facebook Live

RELATED: Visa, Walmart reducing chip-card checkout time

Colleen Tressler of the Federal Trade Commission warned consumers in October about a scam related to chip cards. Scammers claim that you need to update your account to get a new chip card. Don't fall for it. It's just a crook's way of getting his or her hands on your personal information.

Copyright 2016 KTVK (KPHO Broadcasting Corporation). All rights reserved.


  • Recent 3 On Your Side storiesMore>>

  • 3 On Your Side

    Smart devices: Do you own what you buy?

    Smart devices: Do you own what you buy?

    Saturday, February 4 2017 9:52 AM EST2017-02-04 14:52:25 GMT
    Consumers are app crazy, and not only to control temps or lights. They're unlocking doors and maybe even seeing what's inside the fridge. (Source: Alexander Kirch via 123RF)Consumers are app crazy, and not only to control temps or lights. They're unlocking doors and maybe even seeing what's inside the fridge. (Source: Alexander Kirch via 123RF)

    "Oftentimes, the companies that make these products insist that even though you might own the physical object, you don't own the software code inside of it," he said. "And that code is really fundamental to the operation of those products."

    More >

    "Oftentimes, the companies that make these products insist that even though you might own the physical object, you don't own the software code inside of it," digital rights specialist and author Aaron Perzanowski said. "And that code is really fundamental to the operation of those products."

    More >
  • 3 On Your Side

    Did you get a 'free cruise' robocall? You may be eligible for $900!

    Did you get a 'free cruise' robocall? You may be eligible for $900!

    Wednesday, August 16 2017 5:47 PM EDT2017-08-16 21:47:31 GMT

    Information about a robocall settlement has been trending on social media and a lot of consumers are wondering it's legitimate. It is true! Open the story to find out what you have to do to get your money.

    More >

    Information about a robocall settlement has been trending on social media and a lot of consumers are wondering it's legitimate. It is true! Open the story to find out what you have to do to get your money.

    More >
  • 3 On Your Side

    Viewing the solar eclipse: The blind truth

    Viewing the solar eclipse: The blind truth

    Wednesday, August 16 2017 1:20 AM EDT2017-08-16 05:20:27 GMT
    And if you don't buy solar eclipse glasses that are approved, you could have a big problem. (Source: 3TV/CBS 5)And if you don't buy solar eclipse glasses that are approved, you could have a big problem. (Source: 3TV/CBS 5)

    If you don't buy solar eclipse glasses that are approved, you could have a big problem.

    More >

    If you don't buy solar eclipse glasses that are approved, you could have a big problem.

    More >
  • Social Connect

  • Contact

    AZ Family
Contact 3 On Your Side