Merchants, consumers gear up for new chip-based credit card system

New credit card rules will soon be implemented in Hawaii and across the country in order to crack down on fraud.

So how are they different and how will they better protect consumers? By using microprocessor chips.

Goodguys Music and Sound has never had a problem with fraud until recently.

“We had one a few months ago which is still unresolved,” said Clay Nakasone with Goodguys Music and Sound.

Nakasone says the incident cost his business about $1,000 and he’s still trying to get that money back.

The store on Kapahulu Avenue already has the new credit card machine, but it’s not yet activated. The merchant has less than two months to get ready for the new system.

“That when a transaction comes in that the card actually is inserted into the new EMV terminal and that card is in the terminal at that point of transaction,” said Scott Kurosawa with Central Pacific Bank.

“They’ve got chips in them so they’re going to be safer, but we’re going to have to have new software, new hardware, to accept it,” said John Enomoto with Go Bananas Watersports. “With our system, it’s built in. Hopefully they’re not going to charge us extra to get new software.”

“The new ones you have to leave it in and make sure that it reads properly so that it goes through the system,” said Sheri Sakamoto with Retail Merchants of Hawaii. “In some cases, they’re going to have to change their whole system and it could cost tens of thousands of dollars.”

The retailers KHON2 spoke with say they do not plan to pass along any added expenses to customers. Another big change with the credit card system is liability.

Under the current system, banks are responsible for fraud if a counterfeit card is used. Under the new system, retailers are the one who will be responsible.

The new regulations take effect Oct. 1, but retailers, such as Walmart, have already adopted the new system.

Many other countries have already moved to chip-based cards and experts say it’s helped those nations cut down on fraud, including card skimming.

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