Friday, August 5, 2016

Why Does It Take So Long?

Confused by Chip Credit Cards? Get in Line
photo: Bryan Anselm for The New York Times
The New York Times  by KAREN WORKMAN  AUG. 5, 2016 

Chip-enabled credit cards are being used more often in the United States, but lots of consumers are expressing frustrations with them. 
You’re at the checkout counter. Your items have been bagged. Your credit card is in your hand.

Do you swipe it or insert it?

The question has become vexing enough in the United States that a plea from one Twitter user for the country to “get on the same page” has become the unofficial, albeit vulgar, mantra of the nation’s consumers, with tens of thousands of retweets and likes.

Ten months into the transition to chip cards, it’s clear there’s no going back. But as the national frustration grows, here are answers to some burning questions.

Is It Going to Get Any Better?

There is reason to hope.

About 75 percent of credit cards are chip-enabled. If all businesses upgraded their terminals — which they are not required to do by law — at least the confusion over whether to swipe or insert would be settled.

So far, about one-quarter of the nation’s merchants have made the transition, said Jason Oxman, chief executive of Electronic Transactions Association, a trade group for companies that deal with payment products and services.

But while many of them have the terminals, they are waiting to get them certified for use, said Jared Drieling, the business intelligence manager for the Strawhecker Group, a consulting company for the industry.

Why Do Transactions Take So Long?

Technological improvements generally make things easier, but that’s not what this change is about.
The longer wait times at checkout occur because of all these steps in the process:

• The chip creates a one-time code.
• The payment terminal sends it to the bank.
• The bank matches it to an identical one-time code.
• The bank then sends back verification.


The good news: New terminals are being developed to allow chip cards to be inserted and quickly removed, speeding up the process, Mr. Drieling said.

What Was This Change About, Then?


“You can’t counterfeit a chip card,” Mr. Oxman said. “You can very easily counterfeit a strip card.”
Financial institutions changed the rules attached to their terminals last year. Now, if a counterfeit card is used because a merchant doesn’t have the technology to process chip-enabled cards, the merchant is responsible for paying the fraudulent charges.

Businesses that sell goods, like electronics, that can be easily resold on the black market are often targeted by people with fraudulent cards. Because of that, they have a lot of motivation to upgrade. If they don’t, they must pay the bill for all those purchases.

 “But the local coffee shop might not be getting a lot of fraud activity,” Mr. Oxman said, so there’s less motivation to get the new terminals.

There is a chance, then, that at the onset of a purchase, you’ll never really know whether to swipe or dip.

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