Starting Thursday, businesses that accept credit cards must be prepared to handle transactions with new chip-embedded cards or find themselves paying the bill in the event of fraud.
The credit card industry set Oct. 1 as the day when liability for fraud committed with the new cards will shift to retailers and other businesses if they don't have equipment to process chip card transactions. The chips in the cards are harder to counterfeit than the magnetic stripes on millions of cards, but they require new card readers and software to process transactions. If a counterfeit card is used in a transaction and a business doesn't have the new equipment, the company will be liable for the financial losses it suffers.
However, little is expected to change on Thursday at many small businesses. A number of banks and other card issuers still haven't sent the new cards to their customers, who will continue to use their magnetic stripe cards. It's expected that millions of the older cards will still be in use going into 2016. And at least for the time being, it's not expected that thieves will have figured out how to copy the information on the chips.
Although many national retailers have upgraded their equipment, many small businesses haven't. A Wells Fargo & Co. survey taken during the summer showed that only about half of small business owners were aware of Oct. 1 deadline. Only about a third had the new equipment and less than a third said they planned to get it by the deadline. Over time, many companies may feel more pressure to update their equipment.
The simplest card readers are expected to cost at least $100, and the most basic software starts at several hundred dollars. Some small businesses can get their readers and software for free from the companies that process their credit card transactions. An additional cost for many companies will be an information technology consultant to get the new systems up and running.
Businesses like restaurants and stores that link their payment systems with their order and inventory tracking systems are likely to have the biggest expense. So are companies that have multiple locations.