2nd Selectman Can’t Get Turned On

The New York Times just posted an interesting article on a technological phenomenon most of us have recently wondered about: Why the new digital-chip credit cards don’t work.

And the star of the piece is Avi Kaner.

The story begins:

Avi Kaner, a co-owner of the Morton Williams supermarket chain in New York, has spent about $700,000 to update the payment terminals at his stores.

Trouble is, he cannot turn them on.

The new terminals can accept credit and debit cards with embedded digital chips, a security feature meant to reduce the number of fraudulent purchases.

But before the payment systems can work, they must be certified, a process that Mr. Kaner and many retailers around the country are waiting to happen. In the case of Morton Williams, the holdup has lasted several months.

Avi Kaner in a Bronx Morton Williams store. (Photo/Danny Ghitis for the New York Times)

Avi Kaner in a Bronx Morton Williams store. (Photo/Danny Ghitis for the New York Times)

Kaner, of course, is not only an owner of the 15-store, 70-year old grocery retail chain.

He’s also Westport’s 2nd selectman.

When he’s not worrying about produce or credit cards, Kaner helps our town run smoothly.

Much more smoothly, in fact, than that digital-chip credit-card rollout.

(For the full New York Times story, click here.)

8 responses to “2nd Selectman Can’t Get Turned On

  1. Nancy Hunter Wilson

    This is a surprise. Your neighbours to the north have been using chip cards, successfully, for years.

  2. Thanks Dan for picking this up! It has been very frustrating to retailers across the country.

    For those of you looking for help falling asleep tonight, here are some additional points that were not included in the article 🙂

    1) This is a prime example of the credit card companies and certain big banks abusing their power the way an oligopoly would, by unilaterally shifting fraud liability from the banks to the retailers, with no recourse.

    2) The problem may grow significantly across the country as unscrupulous people learn a new way to “game the system”, with the banks’ help. The customers simply shop at local restaurants, bars, and other retailers. They wait for the bill to come, and say they do not recognize the charge. It doesn’t matter that the card was not reported as lost/stolen, and it doesn’t matter that it was physically swiped and authorized by the bank. The retailer receives the chargeback with no way to appeal.

    3) The fees the banks charge retailers for credit card transactions include their cost of doing business, their cost of fraud, and their profit margin. The banks have now shifted the fraud liability onto the retailers, but are keeping the full transaction fee which includes the allowance for fraud.

    4) Banks such as Chase and Citibank are profiting and encouraging this fraud by not even investigating, given that the liability has shifted to the merchant. They are saving money on investigation costs and passing the losses onto the retailers. The banks win both ways while hundreds of thousands of small retailers suffer by the banks’ negligence.

    5) The big banks are issuing cards with both EMV chips and magnetic stripes. They are authorizing transactions using magnetic stripes but are not standing by their decision to authorize a charge. The banks shouldn’t be allowed to have it both ways – to authorize a magnetic stripe charge as being valid but then not honoring it. If the big banks don’t honor their authorization of a magnetic stripe transaction, they should not authorize it in the first place.

    6) According to our point of sale provider, NCR, only 18% of US retailers can accept the EMV chip cards. Although a greater percentage has installed the EMV chip readers, the processors have not certified them to work, so they are not being used. While the large chains have been prioritized, the small businesses suffer. The 28 million small businesses in America account for 54% of all U.S. sales. Small businesses provide 55% of all jobs and 66% of all net new jobs since the 1970s. They are also the least able to afford being charged back with no recourse.

  3. Bobbie Herman

    When I was in Turkey two years ago, I had trouble using my credit card which did NOT have the chip. Apparently, they’ve had them for a few years. I recently received new cards with the chip, but when I used them, it took much longer than with just the magnetic strip.

  4. Gail Garfield

    Avi Kaner it is hard to sympathize with you as my ‘resent’ experiences as a customer in one of your Manhattan supermarkets has been very disappointing…to say the least. I just telephoned “Bill” at your “718” number and he was simply ‘facetious.’ Your store manager at East 80th. and 1st. Ave. is equally as unpleasant.
    I live two blocks from this location and will NOT shop there any longer. When I try to order by ‘phone’ the woman taking the orders is not only rude but lies. One cold day she said ‘I can’t take any orders…it’s too late and I’m going home!” Really?? It was 2pm. The manager defends her. Rumor in the neighborhood ( I’ve lived here fore over 25 years) is that he’s afraid of “Ethel.” I just looked at my notes and found her name. So I now order from D’Agostinos, Fresh Direct, Fairway (min $100 orders.) Mr. Kaner there is much competition these days in food industry, can you really afford to ‘TURN OFF customers??!! There is a positive side: your butcher who is helpful and friendly. I have been buying the “Sterling” meat brand there but will now buy
    “prime” beef at Fairway or Ottomanellis.

    Very Sincerely, Gail Garfield