By Robin Sidel
A trade group representing thousands of retail food stores and
pharmacies is asking the payment-card industry to delay an October
plan that puts merchants on the hook for fraudulent transactions if
they don't have equipment in place to accept more secure credit and
debit cards.
In a letter sent last week to Visa Inc., MasterCard Inc.,
American Express Co. and Discover Financial Services, the Food
Marketing Institute said that merchants won't be ready to meet an
October deadline that will shift liability for fraudulent
transactions from card-issuing banks to merchants.
"Regardless of how strong the commitment or how many dollars
invested, the reality is that the system will not be ready to meet
the card networks' arbitrarily-set mandate for the liability shift
in October 2015," according to the letter from Leslie Sarasin,
president and chief executive of the trade group. The group asked
for the deadline to be pushed back to 2016.
Banks and merchants are racing to issue new cards and install
new technology following a rash of high-profile data breaches that
has exposed hundreds of millions of consumers to fraud. Regional
grocer Supervalu Inc. was hit by one of the breaches last year.
The new cards are embedded with a computer chip that creates a
unique code for each transaction, making it harder for thieves to
create counterfeit cards. Traditional cards have a magnetic stripe
on the back that contains static information about the account
holder that can be more easily duplicated in the event of a
breach.
The U.S. is one of the last countries to embrace chip cards,
which are widely used in Europe, Asia and Canada for years.
Merchants must pay to upgrade their current equipment, including
hardware and software, to accept the new cards.
Hannah Walker, director of government relations for the Food
Marketing Institute, said the group hasn't received a response to
its letter. The request for a delay "is not for a lack of
commitment at all," she said.
Merchants are facing a 16-week delay for delivery of new
equipment that can accept the new cards, according to the letter.
The trade group also noted that the new cards, which are dipped
into a reader instead of swiped, could add time to the checkout
process as the industry moves into the holiday shopping season.
Representatives of MasterCard and American Express said they
have no plans to change the date. Representatives of Visa, and
Discover didn't have an immediate comment on the request.
The National Association of Federal Credit Unions sent a letter
on Thursday to House Speaker John Boehner (R., Ohio) and House
Minority Leader Nancy Pelosi (D., Calif.) that criticized the
request and urged lawmakers to support "strong data safekeeping
standards" for merchants.
Write to Robin Sidel at robin.sidel@wsj.com
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