Credit card chip readers causing problems for many retailers

This Wednesday, June 10, 2015 photo shows a chip-based credit card, in Philadelphia. U.S. banks, tired of spending billions a year to pay back fleeced consumers, are in the process of replacing tens of millions of old magnetic strip credit and debit cards with new cards that are equipped with computer chips that store account data more securely. (AP Photo/Matt Rourke)

YORK, Pa. (WHTM) – Credit cards with chips are supposed to be smarter and safer to prevent fraud, but many retailers aren’t processing them.

With the swipe of each purchase, the magnetic data from your credit card is sent to a financial institution through a vendor. Using a chip instead will generate a unique number or code for each transaction.

“If that number is stolen or an identity theft is taking place. That number is useless. It’s only for that one-time transaction it’s not your credit card information,” said Jeremy Smith, program director of computer systems specialist at YTI Career Institute – York.

The credit card industry set a deadline of last October for retailers to adopt the new system. Otherwise, they are financially liable if a breach occurs. But many big retailers aren’t using them.

“It might be a little bit of an undertaking to switch out to this new system. However the benefits are clearly there,” Smith said.

That’s why Clay Path Studio, a small, “mom and pop” shop in York City decided to get the new system. Even though they likely aren’t the biggest target for hackers.

“It’s kind of frustrating that we are held responsible yet the technology to back up that situation doesn’t work properly,” Kirsten Firlik, a co-owner, said.

Firlik said the chip card reader gives them problems several times a week.

“You stick the card in, it doesn’t connect properly. Then we have to disconnect it from the system and then reconnect it, and then maybe that will work, maybe it doesn’t,” Firlik said.

“That code is sent to your credit card company and to the financial institution and they have to respond back. So there’s some talking back and forth that didn’t use to happen. You’re trading a little bit of time for the extra added security,” Smith said.

“In other places like Europe, a pin must be used in addition to the chip, which is just another safety feature. Smith said the technology is expected to get faster in time.

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