Forex Articles

Have you found it difficult to purchase gift cards at your favorite retailer lately? Have you been told you had to use cash or buy a smaller denomination of gift card? If so, you're not alone.

Many merchants have cut back on gift card sales or started enacting strict rules about how they are sold. Some stores have even stopped selling gift cards altogether.

The reason is simple: liability. Beginning Oct. 1, 2015, retailers became liable for fraudulent purchases if they hadn't upgraded to new chip-enabled card technology by then. This is a big change from the past when credit card issuers (banks) were responsible.

As a result of the changes to credit card liability rules, some retailers have attempted to mitigate their liability while they go through the often lengthy process of upgrading equipment. (For more, see What Is The New Credit Card Chip Good For?)

Interestingly, this new rule is not law. It wasn't passed by Congress or state legislatures. This rule was enacted by major credit card issuers MasterCard Inc. and Visa Inc.

The two companies jointly decided that after Oct. 1, 2015, the entity, be it the bank or retailer, with the lowest level of technology would be responsible in the event of fraud. Effectively, if the bank has not issued a chip card, the bank is responsible. If the retailer has not installed (and certified) a proper reader, the retailer is responsible. If the bank has issued a chip card and the store has the correct reader, according to MasterCard, there will be no fraud. The technology is that good.

The main problem is not so much about retailers not having the machines they need; the problem lies in getting those machines certified by the credit card companies. In some cases, according to the National Retail Federation (NRF), retailers have the machines but have been waiting for months for someone to visit and certify that it's OK to turn the machines on. NRF says there simply aren't enough technicians to certify all the machines that are already out there, waiting to be switched on.

In addition to a lack of technical support, rolling the system out just before the busy holiday shopping season caused many retailers to hold off even getting the machines. Then there was a lot of foot-dragging by card issuers in providing retailers with technical specifications for machines. At the very least, poor planning was a major culprit in the delayed chip reader machine rollout.

In regards to the foot-dragging, NRF suggests something slightly more sinister than poor planning may be the cause, noting that observers should follow the money.

NRF points out that, as of October, banks are no longer responsible for fraud if they have issued chip cards to their customers. At this point, liability shifts to the retailer who may actually have proper machines on-site, albeit machines that are not yet certified. By dragging their feet on certification, the NRF alleges, banks shift responsibility to retailers.

Fortunately, all this frustration will end when all (or most) machines are certified. Experts suggest 50% of all chip card readers will be operational by June of this year, and 90% will be up and running (with certification) in 2017.

Until then, many retailers will continue to impose restrictions on the purchase of gift cards, especially those that serve as pre-loaded MasterCard and Visa cards.

If you still want to buy gift cards and don't want to wait, you have a number of options.

• Buy from retailers with certified chip and pin/chip and signature machines installed.
• Pay cash at retailers that are not yet properly equipped.
• Buy gift cards online.
• Time purchases to account for retailers who impose limits.

While you wait for your favorite retailer to lift restrictions on gift cards, consider some of the options listed above. Keep in mind that most large chains, such as Target Corporation, Wal-Mart Stores Inc.and Macy's should not present a problem since they have the new card readers in place already.

If you decide to look into buying gift cards online, exercise caution. Make sure the website is safe, trusted and reliable. The Federal Trade Commissions Gift Cards page contains lots of excellent information and advice. (For more, see Top Websites For Discounted Gift Cards.)