Credit card liability shift leads retailers to PoS upgrade

The U.S. is the last major market in the world to use magnetic-stripe swipe-and-sign credit card systems. These legacy credit cards are also one of the big reasons why almost half of the world’s credit card fraud happens in America although the U.S. accounts for only a quarter of all credit card transactions. The Target breach affected the credit card information of about 40 million people and the personal data of up to 70 million people.

The rest of the world uses EMV (Europay, MasterCard, and Visa) credit cards. The cards have a chip embedded in them that stores customer data. They are considered much safer than magnetic stripe cards and are much more difficult to hack. The U.S. has been years behind the rest of the world in adopting chip-embedded credit cards. But that is changing.

The push is on in the U.S. to get everyone switched over to the EMV system by October 2015. That’s when there will be a big shift in credit card fraud liability.

After the October deadline, if a retailer is still using the old swipe system, the liability for any fraudulent transactions shifts from the financial institution to the merchant if the consumer is using a chip card.

The shift also involves the opposite scenario. If a retailer has the new terminal, but the bank hasn’t issued a new chip-embedded card, the liability for fraud rests with the bank.

Many U.S. banks, credit unions, and credit card issuers have already issued chip-enabled cards or are in the process of changing over to them. The big question is will retailers be ready?

New PoS terminals
Currently, consumers swipe legacy magnetic-stripe credit cards at point-of-sale (PoS) terminals. The new chip-enabled cards require different processing terminal called a “chip-and-dip.” Instead of swiping, the consumer inserts (or “dips”) the card into the EMV processor. This requires retailers to invest in new equipment and, possibly, new infrastructure to support the processors.

Some retailers, such as Walmart, have already installed checkout terminals that can process the chip-and-pin cards. Other retailers are in the process of installing the new terminals.

One national retailer, a longtime Black Box customer, is using this opportunity to upgrade its infrastructure from the data center to the IDF at the front-line cash registers. The upgrade includes installing new horizontal CATx cable, patch cables, patch panels, and secure wallmount cabinets.

Depending on the network (retail or not), other extension and IDF upgrades can include:

• Running fiber cable beyond the 100-meter copper limit and for EMI/RFI immunity.
• Using small, locking enclosures, including climate-controlled cabinets.
• Saving space at crowded registers with right-angle patch cables.
• Securing network connections with lockable patch cables.

For the key structured cabling standards, you may be interested in this white paper: Structured Cabling Standards and Organizations.