Merchants rolling out more secure credit card readers

Thursday marked a milestone in the fight against credit card fraud, but retailers showed uneven progress in meeting that target date for upgrading registers to accept cards with chips.

Retailers were given until Thursday by major credit and debit card issuers to switch to the new system and avoid being held liable - instead of the issuers - for fraudulent purchases.

While large retailers like Home Depot, Target and Wal-Mart reported being on track, many independent merchants were still weighing the extra cost and risk.

In a national Wells Fargo/Gallup poll last summer, only 31 percent of the independent merchants said their readers take chip cards, One-fifth said they weren't going to upgrade.

And many consumers have yet to receive the chip cards anyway.

Develin Matthews, manager at John's Grocery in Iowa City, said the store rented instead of bought the technology.

'The initial financial investment is more than a lot of retailers can handle when you're small like we are,” he said.

The readers can cost thousands of dollars to purchase and install.

Paul's Discount store installed the technology at both its Iowa City locations two weeks ago, but not without issue.

General manager Rob Cassidy said an employee spent up to two hours on the phone with the credit card processor when she had issues closing out the register.

But he doesn't think any customers there have experienced issues.

'We knew this was coming for a long time, and we made sure all our terminals were compliant,” he said.

Analysts predict that up to 70 percent of cards will have the computer chips by the end of the year. Consumers should be aware there are minor changes in checking out with a chip-enabled card.

Here's what shoppers need to know:

Why the change?

Instead of swiping credit and debit cards, more retailers are asking consumers to dip them into new card readers that are supposed to be more secure. The technology uses cards with chips embedded in them, and is supposed to cut down dramatically on incidents of thieves stealing card information and making fake copies.

How do they work?

Basically, chip cards are credit or debit cards with a computer chip. Instead of sending retailers and card companies the same information each time they're used, the way the magnetic stripe works now, the chip sends out a unique code for each transaction. The idea is that any thief who is able to intercept the code won't be able to use it again to make a fraudulent purchase.

What should I do at the register?

Unless you are told otherwise by the cashier, you should swipe your card as usual. Some terminals will recognize the chip and ask you to dip the card into the slot underneath the key pad, said Deborah Baxley, a principal in Capgemini Financial's Cards & Payments unit. When you are using a chip reader, you don't want to remove the card quickly. You'll need to leave it in place a few seconds until the transaction is complete.

Will this stop fraud?

Unfortunately, thieves are fast learners. As more and more in-store purchases are completed with chip technology, it will get harder for thieves to make fraudulent purchases inside stores. But security experts say they widely expect credit card fraud to move online, where thieves can still use the card number and expiration date to make fraudulent purchases. Retailers are moving to catch fraud online by scanning for details, such as a person's IP address, email address and other data points, but their information is often limited,

Should I worry if I don't have a chip card?

Your older magnetic stripe card should still work at most retailers. And banks are still in the process of sending out the new cards. Consumers who want to get a new card can call their credit card companies and request one, said Matt Schulz, an analyst for CreditCards.com.

Will these readers be at ATMs and gas pumps?

Eventually. Replacing readers attached to gas pumps and ATMs is more complicated, so they have more time, until October 2017.

The Los Angeles Times and Washington Post contributed to this report.