Panel looks into chip-card technology delays at N.J. stores

Electronic transactions and banking representatives testify at an Assembly Consumers Affairs Committee hearing Monday. (Phil Gregory.WHYY)

Electronic transactions and banking representatives testify at an Assembly Consumers Affairs Committee hearing Monday. (Phil Gregory.WHYY)

New credit cards embedded with microchips are intended to prevent fraud. But New Jersey legislators want to know why Assembly committee is wondering why consumers face a delay in using them at some stores.

Testifying Monday before the Assembly Consumer Affairs Committee, Paul Martino of the National Retail Federation said many retailers are still waiting to have the chip-readers activated.

“One of the big problems is there’s a backlog of the technicians required from the card companies to come out and certify that the machines are working and able to accept the chip cards,” he said.

Delays also may be due to merchants who want to integrate their loyalty system with their payment system, said Jason Oxman, CEO of the Electronic Transactions Association.

“No one comes from the card networks to certify it on site, but the software solution does need to be certified that it won’t defeat the security parameters that have been put in place by the system,” he said.

About 60 percent of New Jersey’s retailers are able to accept the chip cards.

The Retail Merchants Association also has recommended requiring a pin number for the chip card transactions in stores and online as a way of providing more protection.

But Oxman said the payments system isn’t set up to handle that.

“The question of whether to require all consumers to use a pin or not has to take into account the fact that two-thirds of merchants today just don’t have pin pads, just don’t have the infrastructure to process them,” Oxman said. “There are about a million restaurants in the U.S., and none of them have pin pads.”

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