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Judge Allows Small Businesses To Sue Credit Card Giants For Forcing Them To Adopt Chip Readers (computerworld.com)
An anonymous reader quotes a report from Computerworld: A federal judge has ruled it is plausible that four national credit-card companies improperly conspired "in lockstep" to set a deadline of Oct. 1, 2015 for requiring retailers to upgrade their technology to accept embedded chip cards for credit and debit card purchases. In an order issued Friday (Case number C 16-01150 WHA), U.S. District Court Judge William Alsup agreed with two small Florida businesses -- B and R Supermarket and Grove Liquors -- which brought the lawsuit in March. Alsup's ruling also allows the antitrust case against Visa, Mastercard, American Express and Discover Financial Services to move forward in federal court for the Northern District of California. The two retailers are seeking to create a class-action case involving millions of small retailers who have been required under the Oct. 1, 2015 deadline to assume liability for fraudulent card charges if they haven't upgraded to the more-secure chip card technology instead of magnetic-stripe cards. The retailers believe there was industry conspiracy over creation of the deadline that violates fair trade practices. In the same ruling, the judge allowed two other retailers -- Los Angeles-based gourmet food chain Monsieur Marcel and New York-based grocery story chain Fine Fare -- to intervene in the case. Lawyers for the retailers have said a class-action lawsuit could include 8 million U.S. small businesses. They would seek repayment of the cost of upgrading to chip card readers and related software, estimated at $6 billion. However, the National Retail Federation has recently estimated the total cost of the conversion in the U.S. at up to $35 billion.
They're just not happy about the liability shift strong-arming them into this. But honestly? They SHOULD be liable when they're the roadblocks preventing customers from having good security. They're dragging their feet on this because it's an externality--they don't care if their customers get screwed, as can be seen with, e.g. the Target hack, but they do see a cost for newer, more secure equipment.
And I can tell you right now that they won't make proper upgrades unless someone holds a gun to their heads.
I'm not sure if I have any sympathy for these retailers. The card industry did not force them to accept chip transactions, they forced them to accept liability if they refused to accept chip transactions. You can still, to this day, accept magnetic stripe data instead of chip data. You can also choose to take cash at any time. They also gave the warning more than a year in advance and even basically extended the deadline past October 2015.
Disclosure: I do make money off the chip card transition. However, I make money off of magnetic stripe implementations also.
This "upgrade" is a complete farce. If they had moved to chip and pin then, yes, it would make sense for all businesses to adopt it. As it is, they moved from a "something you have" model to a slower "something you have" model. Without a "something you have and something you know" model, the upgrade is mostly just an inconvenience to all involved parties (except the credit card companies who can now defer more blame).
I wonder what makes Americans so resistant to change, and when they implement change, it has so many compromises to be unworkable?
Whether it be.
- Adoption of the metric system
- More sensible gun management
- Universal basic health care
- Writing dates mm-dd-yy
- Reform of you court/prison system
Australia has changed completely to chip cards. Mag swipe is no longer accepted.
For most merchants, transactions below $100, contact-less is used.
For over $100, a pin is required (and for some cards like amex, you need to insert the card for a chip read).
The transactions take around 2 seconds.
It works great. The $100 threshold is a good compromise for convenience vs fraud risk.
I assume you are complaining because your banks have stuffed up the implementation???
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Any idea on who pays for the terminal upgrade, it wasn't mentioned in the article?
The terminal is owned by the merchant, so they pay for it.
If it is being forced on a business, then the credit card company should be sending them out free of charge
It isn't being forced on them. They have the alternative of not accepting CC transactions, which is something many businesses do. At some point we need to have progress, and magstripes need to die. Many technical standards have deadlines where old features stop being supported.
The merchants have had plenty of time to upgrade, and plenty of warning that the end was coming. Most merchants support the change, since it is the merchants that pay the biggest price for fraud. That is why the plaintiffs are having problems organizing a class action. It is only a few whiners that are complaining.