Small businesses might not be happy about it, but change is coming to your wallet.
New chip-and-PIN credit cards being rolled out by Visa and MasterCard offer consumers another layer of security. They also mean merchants have to absorb the cost of outfitting stores with new chip-reading terminals or compatible processing systems, which has raised suspicion among small retailers.
The new cards still have magnetic swipe strips, but retailers are under pressure to convert to the more secure system now. After October 2010, non-compliant retailers will be liable for fraudulent transactions made through swipe technology.
The cost of updating could run into the hundreds of thousands of dollars for large retailers.
The changes have been in the works since 2003, but come at a time when retail sales plummeted to their lowest level in 15 years.
"The timing sucks. You know, the economy is not so great," said Catherine Swift, head of the Canadian Federation of Independent Businesses.
"Another increase to their cost base is never welcome obviously, but it's particularly unwelcome right now."
Small and mid-sized businesses are reeling from dramatic transaction fee increases - to the tune of 25-to-30 per cent during the last nine months - and see the move as just another way for credit card companies to make a buck.
"We suspect it's being used as an excuse to charge even higher fees," Ms. Swift said.
She said she would be shocked if transaction fees didn't increase once chip-and-PIN technology becomes standard.
A spokesman for Visa insisted that isn't happening. "There is no correlation between the introduction of chip and PIN and fees charged to merchants," said Mike Bradley, head of products for Visa Canada.
"The move to chip is part of Visa's ongoing commitment to providing secure payment products and services."
Chip and PIN protects merchants from fraud, reduces operational paperwork costs and saves time during transactions - all of which saves retailers money.
Canadian retailers have been given extra prep time to cost-effectively phase in necessary support systems. British retailers took just two years to make the switch.
The capital costs involved in switching to chip-and-PIN technology might seem daunting, but it could save retailers money in the long run, Mr. Bradley said.
Terminals cost about $200 each, according to a Visa-sponsored report by Toronto-based J.C. Williams Group. Implementing the software and certifying the systems to power those terminals could drive costs up into the hundreds of thousands of dollars.
The sluggish economy shouldn't affect how long it takes for merchants to see a return on their capital investment, Mr. Bradley said. Right now, that's projected to be between 21 and 35 months.
Chip-and-PIN technology is already widespread in Europe and will become the new norm in Canada, Mr. Bradley said.
In the meantime, credit card companies need to do more to eliminate confusion and keep small business owners up-to-date with changes in credit card policies, says Ms. Swift.
"If you're The Bay, you probably have a whole department looking at these kinds of things everyday," she said. "But the guy with five employees sure isn't going to be. They can't."
More than a third of Visa's merchant base - roughly 225,000 retailers - were accepting chip cards as of last year.
By end of this year, Mr. Bradley said 14 million cards will be in circulation.
"The numbers are growing pretty dramatically. I think you can expect over the course this coming year more Canadians will be able to benefit from the technology of chip and PIN."