Customers insert their chip cards into the bottom of Cherry Republic's chip card reader.

TRAVERSE CITY, Mich. — Entering the biggest shopping time of the year, businesses nationwide are installing chip-card readers as another form of insurance for consumers and businesses worried about credit card fraud. 

A chip-card is a standard-size plastic debit or credit card that has an embedded microchip as well as the traditional magnetic stripe. The chip, called an “EMV” chip stands for Europay, MasterCard, Visa — the three companies that created the technology — stores information to increase security and protect against fraud when making transactions at terminals equipped with chip-card readers. 

With the rise of credit card fraud and large data breaches, U.S. card issuers are transitioning to this new technology to protect consumers and reduce the costs of fraud.  

Purchasing a new chip-card reader will not be mandatory for businesses. However, the shift in liability means that while you aren’t required to update to a chip-card reader, if businesses do not update by the deadline, these establishments are responsible for the fraud that occurred, rather than the credit card companies carrying the liability.

Michigan business owners like Kevin and Toni Whiting of the Rounds Restaurant are paying around $600, plus a monthly wireless bill a month. Rounds, along with other area businesses and banks, is making the switch to credit card readers with microchip terminals after the Payment Networks’ Liability shift became effective Oct 1.

“If we didn’t update to this program, we’d be responsible for the damages of any fraud that we incur: any money stolen or charged to an account that occurred directly from our equipment,” Kevin Whiting said. “In today’s world, that’s pretty scary.”

Card issuers aren’t off the hook until they issue users the chip-enabled cards. TBA Credit Union in Michigan started issuing chip cards in August, Chief Financial Officer Robin Wybenga said. The bank is replacing members’ magnetic swipe cards as they expire and aims to be entirely transitioned within two years.

“There hasn’t been a high demand for them, but we want to increase security for our members,” Wybenga said. “Some of the bigger retailers in the area are accepting chip cards, but many others haven’t transitioned yet.”

National and local business owners hope the new technology will help prevent fraud, but some are skeptical of the difference it will make.

“Is it going to make the card info less likely to be stolen? That’s kind of hard to say, because every time you try to get ahead of technology there’s going to be something else that comes up,” Alyson Young, store manager of Roth Shirt Co. in Traverse City, Michigan said.

Woodward writes for the Record Eagle.