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For a year, retailers have been installing card readers at their cash registers so that they can handle new debit and credit cards equipped with fraud-fighting computer chips.
Now, it’s the turn of ATMs.
Banks and third-party companies that operate ATMs are dealing with two deadlines to update their machines to handle the cards, called EMV cards, issued by Europay, MasterCard or Visa. The first deadline was Saturday for MasterCard-issued cards. The second deadline is Oct. 1, 2017, for Visa-issued cards.
If the owners of ATMs miss those deadlines, they — not the card provider — become liable for fraudulent transactions on their ATMs that are unable to read chip cards.
But the chip technology for ATMs is important to consumers as well. The upgrades to ATMs reduce the threat of fraud at the machines, including the use of counterfeit cards and skimming, a process used by crooks to capture the data on the strip on the back of a card.
Debit cards often are used at ATMs to withdraw cash from checking accounts. Those scammed out of money taken from checking accounts have a harder time getting it back than those who were defrauded via credit card because the latter can withhold payments on disputed items until the issue is resolved, said Greg McBride, Bankrate’s chief financial analyst.
“Chip cards, in whatever fashion they are used, are designed to prevent unauthorized transactions,” McBride said. “When it comes to ATMs, there is a much greater inconvenience for the consumer if fraudulent activities takes place. … The money comes out, and then you have to get the horse back in the barn.”
Thieves stole $15 billion from 13.1 million victims in 2015, according to Javelin Strategy and Research, a business advisory firm. That was down slightly from 2014, when the first chip cards were introduced.
The increase in chip cards last year changed the purchase process significantly for retailers. Instead of swiping the card, the user inserts it into a card reader at the register and leaves it in the machine until the transaction is completed, which can take several seconds. That has led to complaints about the time required for transactions.
Consumers don’t figure to see as much difference at ATMs. Many consumers are used to inserting their debit card into an ATM and waiting a few seconds for that transaction to finish.
“I don’t think it will be that noticeable,” McBride said. “It doesn’t change the consumer experience.”
Some banks, including PNC Bank and JPMorgan Chase & Co., have used the deadline to upgrade their ATMs beyond reading chip cards.
Pittsburgh-based PNC Bank, which has 9,000 ATMs, is enhancing the screen so that it is easier to read, providing more protection meant to shield customer PINs from potential thieves, offering e-mailed receipts and creating personalized options to speed up transactions.
“The goal for us is to address the security of our customers, and doing that also is going to align up with the changing of the rules and the shifting of the responsibility,” said Sandy Zimmerman, a PNC executive vice president who heads PNC’s retail operations in central Ohio.
Zimmerman said consumers with cards that haven’t been updated will still be able to use them in the upgraded ATMs.
The upgrades come at a time of significant change in how consumers bank. PNC says nearly six in 10 PNC customers do most of their banking without involving a teller.
Chase says it, too, is upgrading its 18,695 ATMs, including 554 in Ohio.
“We are actively refreshing the ATM fleet with higher-capability machines (which are chip-compliant) that can complete more types of transactions and more flexible transactions,” Chase spokesman Jeff Lyttle said in an email. “Soon, you’ll able to complete 90 percent of formerly teller-assisted transactions at an ATM.”
As has been the case with retailers, some ATM owners, including non-bank companies, missed the deadline with at least some of their machines.
“It is not proceeding as quickly as everyone would like. The debit-payments landscape is more complex because of all the networks,” said David Tente, executive director of the ATM Industry Association.
“It been a big cost to deal with it,” Tente said; the sum for ATM operators is estimated at $1 billion.
Even an inexpensive upgrade of a basic ATM can run several hundred dollars. Upgrading more-sophisticated bank ATMs could run into the thousands of dollars, he said.
An association survey of ATM operators finds that 58 percent expect to have 76 to 100 percent of their fleet upgraded this year to handle chip cards. By the end of next year, 79 percent of operators expect to have their fleets in that range, but it could be years before there is 100 percent adoption.
The survey found that operators expect to operate 6 percent of their fleet as the machines are now, meaning there is no plan for an upgrade or replacement.
ATMs that are in places such as bowling alleys or bars might just be taken out of service.
“That’s the group that I see as a challenge with this,” PNC’s Zimmerman said. “It’s a big investment. Some owners may say that’s not worth it and may remove some of the machines.”