While the main benefit of chip cards is more security for consumers, which can also work to a retailer’s advantage, particularly if it can make the change quickly.
Reducing fraud is a plus in and of itself, obviously, but offering extra financial protection to shoppers can increase their confidence in the retailer.
Just as critically, a retailer that provides valuable, cutting-edge conveniences ahead of its competitors can gain customers and then build their loyalty — which are strong incentives to join the chip-card crowd sooner rather than later.
The rollout of chip-enabled credit and debit cards in the U.S. is due in good part to ongoing credit card theft. Counterfeit cards, driven mostly by thieves stealing magnetic-stripe information, account for over one-third of all credit card fraud.
Fortunately, chip technology has been proven to reduce card fraud. Europe has been using chip cards for over two decades; card fraud in the U.K. dropped 67% in the decade following chip-card implementation.
Despite these economic and security benefits, the migration process has been slow in the U.S.
Issues delaying migration include the time it takes retailers to receive certification, the cost of installing new terminals, and retailers’ perceived lack of return on that investment.
The latter two issues are simply the cost of doing business, though; chip cards will soon become the standard form of card payments, and retailers that don’t comply will lose customers. As for the certification bottleneck, Visa and MasterCard both streamlined their (separate) processes by reducing the number and length of their terminal tests.