Ask Laz: Why aren’t more merchants geared up for chip credit cards?

Chip cards

Chip-equipped plastic is safer, but banks and merchants have been slow to make the switch.

(Getty Images)

Loren has been following the switch to new and improved “smart” credit cards with embedded microchips and has a request about retailers:

“Please explain why merchants are getting away with chip-card non-compliance.”

Can do.

ASK LAZ: Smart answers to consumer questions


First, a quick refresher. The United States has lagged other countries in advancing from easily hacked cards with magnetic stripes to safer chip cards. In large part, that’s because banks and merchants have bickered for years over the cost of the changeover.

The credit card associations, such as Visa and MasterCard, finally had enough. They expedited the move by announcing that, as of Oct. 1, whatever retailer hadn’t made the switch would be responsible for compensating card users for acts of fraud.

Before October, card issuers routinely swallowed that cost. That remains the case for any bank that hasn’t yet issued customers with chip cards -- and it’s estimated that about 80% still haven’t.

If a consumer shows up at a store with a chip card and the merchant doesn’t have a chip-ready card reader, the merchant assumes the cost of any fraud.


Therefore, Loren, it’s not that retailers are “getting away” with ignoring the change to chip cards. Many just haven’t splurged yet on the necessary technology.

That’ll change as more chip cards go into circulation and more merchants are hit with fraud charges.

And then banks and retailers can go back to bickering over why it costs so darn much to process a transaction using plastic. But that’s a different story.

If you have a consumer question, email me at or contact me via Twitter @Davidlaz.

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