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Maine Lagging on Adoption of New Credit Card Readers

Sean MacEntee
Flickr/Creative Commons

Today is the deadline for retailers nationwide to begin using new credit card readers designed to combat fraud.

Under the system, consumers will slide new credit or debit cards, embedded with microchips, into a slot at checkout.

Many business in Maine and across the nation have yet to get the new terminals up and running.

And that means they could be held liable for fraudulent transactions.

Those old credit and debit cards, the ones that are probably still in your wallet, they can make you vulnerable to fraud.

The problem? That dark strip that runs across the back is magnetic and holds sensitive information that cybercriminals can use to make phony purchases and fleece your bank account.

The old cards, though, are slowly being replaced by new ones with shiny microchips on the front.

"The way the chip card works is it creates a single-use encryption code," says Curtis Picard, a code that is different for every single transaction. Picard runs the Retail Association of Maine.

"That's why it has to be inserted into the machine, as opposed to swiping," he says.

Most developed countries have been using the new machines that go with these more secure credit and debit cards for several years now. But rollout in the U.S. has been slow.

Picard's group represents roughly 400 businesses statewide. He can't say exactly how many members have upgraded their machines, but he says many large multistate retailers, such as supermarkets and big-box stores, have the systems up and running.

"I think the smaller retailers are taking a little more time with it," he says.

This delay is happening across the country, not just in Maine.

Some retailers have told Picard that they've upgraded their checkout terminals only to run into delays getting the certification required to run the equipment.

Installing the new card readers can also be expensive.

"Three terminals. I think it was around $800," says Tina Wilcoxson, owner of Freeport market Royal River Natural Foods, which upgraded its three checkout terminals last week. "It's not an insignificant amount of money. I'm sure that's why maybe some smaller places are hesitant to switch."

There have also been delays getting the new chip-embedded cards into the hands of some consumers.

"It is a monumental task for two reasons," says Chris Pinkham, who runs the Maine Bankers Association, which represents the state's 31 banks. "One, over the last four or five years there have been a number of security breaches that have caused banks to reissue cards."

Some banks, he says, simply began reissuing cards with the chips in them. But others waited until the beginning of the year to start ordering cards from the vendors that supply them.

"And candidly, with any supply and demand issue, with this many changes taking place, they have been a little bit slower in producing the cards, which are a little bit more complicated and more expensive to produce because of the chip," Pinkham says.

The Oct. 1 deadline isn't a hard and fast one. Consumers can still use their old swipe cards. And Maine retailers can take their time upgrading their card readers.

But Picard says businesses do have a compelling reason to move forward as quickly as possible.

"The Oct. 1 deadline is when liability is going to shift to the retailers, if they don't have upgraded equipment," he says.

Which means the retailer, and not the bank that issued the card, is on the hook financially if a customer comes in and buys something with a stolen card.