“When you do see a retailer that has installed a chip-enabled terminal, they often aren’t yet activated, so if you stick your chip card in the slot, nothing will happen,” Schulz says. Getting those terminals fully working and getting employees trained up to know how to use them and guide customers through using them is all part of the transition process. It’s going to take time.”
It's also going to take money. According to market research firm Javelin Strategy & Research, there are 15 million card readers, 360,000 ATMs and more than 1.1 million credit and debit cards that would have to be replaced at a cost of roughly $8.65 billion. Retailers who've been breached are making the switch if only to restore the public's trust in their business.
Home Depot's breach put 56 million credit card numbers and 53 million email addresses into jeopardy. Security blogger Brian Krebs discovered that the software used to infiltrate Home Depot's system was similar to that used last year to snatch the data of more than 70 million Target shoppers. Credit protection firm BillGuard
estimates that losses from fake charges tied to the Home Depot breach could reach upward of $3 billion after a hacker sold millions of stolen credit card numbers on the Ukraine-based site Rescator
Unfortunately, those breaches haven't been new or rare occurrences. Back in 2007, 94 million shoppers had their data compromised after using their cards at TJX stores including T.J. Maxx and Marshall's. Last year, data of more than 300,000 cardholders were accessed during a breach at Neiman Marcus. In August, hackers lifted data from 33 P.F. Chang's restaurant locations. All of that has taken its toll on consumer confidence.
Related: The Crime Americans Fear Most Costs $445 Billion a Year
"My thoughts on card usage is that folks are definitely using some cards less — particularly in the the wake of recent data breaches,” says Curtis Arnold, founder of credit card industry rating and monitoring sites CardRatings.com and BestPrepaidDebitCards.com. "I do think that with the new security regulations coming later this year that this will change. And I think that the card decline is usually temporary — we as humans have short memories."
While blame lies with the hackers, Arnold and other experts note that the decades-old credit card technology still being used in the U.S. enabled breaches.
A bit of the blame, however, rests with consumers themselves. Their sloth isn't to be underestimated. A CardRatings survey found that a quarter of all cardholders had been victims of data theft, but among those victimized, only 51% checked their credit card statement, 45% checked their credit report, 54% checked their bank accounts and only 24% either signed up for credit monitoring or put a credit freeze in place. Only three in every 10 U.S. cardholders has a chip-and-PIN card, a CreditCard.com survey says.
That leaves it to card issuers and retailers to put as many safeguards in place as possible to woo skeptical consumers. That hasn't been easy, as even mobile payment options such as Apple Pay and Google Wallet that bill themselves as secure alternatives to existing card technology have been largely shunned. CreditCards.com also found that two-thirds of U.S. consumers say they would “never” or “hardly ever” use their smartphone to make a purchase. Schulz says even the appearance of vulnerability makes U.S. shoppers — especially older consumers — hesitant to embrace mobile payment. That leaves the somewhat more familiar EMV cards as issuer and retailers' best hope, and one they're clinging to well before their October deadline.
”The biggest obstacles to mobile payments usage are convenience and security," Schulz says. "Consumers are already very comfortable swiping their credit and debit cards. Most people don't see why a mobile payments service would be quicker, easier or more secure."
This piece originally appeared at MainStreet.com.
Read more at Main Street:
How to Do Rewards Cards Right, Especially When You Just Want Cash Back
Is Now the Time to Start Closing Credit Card Accounts?
10 Things You Absolutely Need to Say in a First Interview