The new ‘smart’ credit and debit cards: What Idaho businesses should know

Calling the room that houses the credit card terminal at Signs2Fit an “office” in Garden City would be a stretch. The machine sits on a workbench upstairs from the buzzing flatbed printer and all of the other noisy machines Brian Price and his employees use to make signs and produce a plethora of embroidery, printing and anything else that can be emblazoned with a business name.

But the room is where Price has processed about 100 orders per month since he bought the business in May. After completing his purchase through Zions Bank, his Zions contacts recommended he upgrade his credit card terminal in anticipation of the nationwide rollout of new credit and debit cards. The “smart cards” embed a thin chip that will eliminate some kinds of card fraud.


Changing credit card terminals costs money, but there’s a good reason most businesses should spend it. Today, some kinds of fraud are covered by the company or bank processing the payment. After Oct. 1, any businesses operating with old terminals will become liable for fraudulent in-store purchases, excluding phone and Internet orders.

The new terminals will recognize if a card has been duplicated and decline the payment. That gives Price some peace of mind.

“The liability issue is fairly concerning,” he says. “As a business owner, it’s nice to have a nice little security blanket, to know if a card doesn’t read, that I shouldn’t take it.”

The new cards — formally called Europay Mastercard Visa cards, or EMV cards attempt to eliminate card fraud caused by duplicating card information. One common form of such fraud involves employees setting up card skimmers at pay terminals, says Jesse Ronnow, senior vice president and area manager for Zions’ Treasury Management Department. That information is electronically relayed to a destination where it can be accessed and reused online or duplicated onto a fake card.

The new cards will be harder for criminals to manipulate, though Ronnow believes they will eventually figure out how.

“It’s currently pretty easy through fraudulent methods to re-create credit cards,” he says. “With the new technology they can’t, or haven’t yet. But with all things in credit fraud, it’s a matter of when.”


Ronnow says his staff has spent the past few months walking through the coming rollout with business customers like Price. New terminals cost between $250 and $600 apiece, though some Zions customers are opting to retrofit their current terminals for less. Price says he qualified for a refund from Zions, making his terminal upgrade free.

Zions has already sent smart some cards to customers, and the rest will be on the way soon, Ronnow says.

“In Quarter 1, we started sending corporate purchasing cards, which have a higher probability for fraud,” he says. “We started sending personal credit and debit cards in the end of June. Customers should begin to see those cards.”

Washington Trust Bank began emailing and calling business customers about the rules change in April, says Carrie Everman, manager of merchant services. Most customers have been receptive, she says. Businesses that order new terminals now could avoid possible delays from the expected logjam of last-minute orders as October approaches, she says.

“There have been a few holdouts,” she says. “Some business owners say they aren’t in a position to get a lot of fraud now, so they’ll wait and see what happens, or that they don’t want to spend the money. We’re telling them this could turn into a supply-and-demand situation.”

The upgrade is costliest to chain businesses, such as gas stations or bars that have several terminals at each of many locations, Ronnow said.

“But for the vast majority of clients in Idaho and certainly in the Treasure Valley, most are looking at two or three terminals,” Ronnow said. “We’re talking an expenditure of two or three thousand, or assume fraud charge liability, which could cost thousands.”


Not all smart cards are created equal, says Pam Eaton, president and CEO of the Idaho Retailers Association. Some require a personal identification number, as debit cards do today. They offer greater fraud protection than other smart cards that require only a signature.

“Anyone can forge a signature, and most people’s signature even looks quite different from time to time,” she says. “But only one individual knows the PIN.”

The Idaho Retailers Association and Idaho Lodging & Restaurant Association have held webinars and sent out information about the switchover to alert members about the importance of upgrading their terminals, Eaton says. She had hoped for more response from business owners.

“I fear that there’s a large part of the business community that either doesn’t understand or is simply ignoring the looming October date and the liability shift that will occur,” she says.