Evan Schuman's StorefrontBacktalk

Visa’s statement said the move had been requested by Canadian retail chains, and the brand said the date to make the change was tomorrow (October 1)—two weeks earlier than what the MasterCard statement said.

“Visa and its clients recognize the complexity of the migration to chip payment technology by Canadian merchants,” the Visa statement said. “Merchants who are in the process of making the conversion will have additional time to implement chip-compliant technology and can temporarily delay the introduction of changes to their payment environment in the lead up to and during December, typically the busiest shopping period of the year. This postponement will not have any negative long-term impacts on chip migration in Canada.”

The Retail Council of Canada, who had lobbied for the delay, said the factors behind the delay go far beyond avoiding a shift near the holidays.

“There are some questions about the technology itself, some issues with terminal pad failures,” said Mark Beazley, the Council’s communications director. “Some of our members are seeing very high failure rates when processing Chip-and-PIN transactions” and using the chip. The problems “are likely related to an electrostatic discharge from the chip when the card is in the terminal reader, which was causing some issues.”

Part of the electrostatic problem might simply be a reflection of the different ways readers handle mag-stripe versus chip transactions. With a mag-stripe, the stripe is run past a head that reads the card, but the card never actually touches the reading head. The head floats above the surface of the card, the way a disk-drive’s head does.

On the other hand, to read a chip card, the reader actually connects electrically to the chip and is putting electrical power into the chip. If the card is removed before the power to the card is turned off, there could be some charge left on the card.

The Council’s Beazley said that another issue would be the rules surrounding the liability shift. What if circumstances force the retailer to use the mag-stripe? Should a retailer still absorb the higher liability? For example, Beazley said, what if the card is damaged and the chip won’t function? Or perhaps the consumer has forgotten his/her PIN? If the goal is to strongly incentivize retailers to use the more-secure chip, doesn’t that anticipate that the retailer physically can?

“Should the retailer turn away the sale or swipe the card?” Beazley asked. “We’ve raised a number of these concerns.”

One longtime payment consultant, Todd Ablowitz (president of the payment consulting firm Double Diamond Group), argues that the Canadian delay could foreshadow U.S. challenges.

“It’s no surprise to anyone that changing the entire acceptance experience for consumers, merchants and the back-end providers is a seismic experience. Despite years of notice, and lots of best efforts and good intention, it’s well-known that many in the retail community just aren’t ready,” Ablowitz said. “So, like some PCI initiatives, the natural response is delay. In this case, it’s liability shifts being delayed, as opposed to fines. It goes to show us, if EMV can be delayed in Canada—after being on the table for almost 5 years—how far we’ll have to go with U.S. point of sale to see any major changes.”