PNC Bank recently announced that it will update the technology for its automated teller machines so they can read chip-enabled cards.

A new directive from MasterCard that takes effect Oct. 1 will shift card fraud liability to the ATM owner. That’s causing banks, credit unions and independent ATM owners to decide how best to improve card security.

PNC, for example, is rolling out software upgrades to enable ATMs to read these EMV cards, which are harder to counterfeit than traditional magnetic stripe-only cards, according to Ken Justice, the bank’s senior vice president and ATM executive.

“Our customers will experience enhanced security with their ATM transactions due to the unique transaction code from the chip which is shared with the ATM,” Justice said in a news release Aug. 23.

PNC has ATMs at its seven Wilmington market branches and additional machines at area Harris Teeter stores, said Chris George, senior vice president retail banking and PNC’s regional manager for the area. 

He said he expects the new technology to roll out locally in September. That will mean the technology will be in place by Oct. 1.

George added that Visa will change its liability from itself to the ATM owner in October 2017.  

The need to adopt EMV technology at ATMs to protect against fraud liability may trigger a fundamental change in the ATM business, Justice said in the release. 

“Many of ATMs owned by third parties commonly seen in venues such as bowling alleys and bars may go away because of the cost of upgrading,” he said.

What makes EMV, or chip-enabled credit and debit cards, more secure than traditional cards with their magnetic strip? 

“What the chip delivers at each transaction is a one-time token or code, which cannot be reused by a fraudulent or cloned card,” George explained.

EMV stands for Europay, MasterCard and Visa, the three companies that created the technology and required that merchants in the U.S. begin accepting chip cards as of Oct. 1, 2015, or bear the cost of card-present fraud. George said he has seen the expansion of chip acceptance by merchants since last October.

Concern about card security has grown as increasing numbers of bank customers skip the teller lines and use ATMs and mobile devices for banking transactions. 

George said 58 percent of PNC customers are now doing their transactions through those channels.

PNC customers will see no real design difference at the ATM once the machines are converted, according to George. The process will still be the same: a customer inserts a chip-enabled card, and the machine will automatically read the chip code rather than reading the customer’s information from the strip.

Chip cards may have to remain in the reader longer than stripe cards, but recent advances in technology have sped up the chip-reading process, George said.

Other banks are moving into chips as well, increasing access to chip technology as the ATM changeover looms. Part of the effort is providing customers with chip-enabled cards as customers’ stripe cards expire. Some financial institutions, including South State Bank, are accelerating the process.

“South State Bank has been working over the past year to reissue EMV chip cards to our customers,” Mark Tyler, the bank’s Wilmington regional president, said in an email. “By October 2016, 95% of our personal and business debit cards will be equipped with the new chip technology. As customers receive the new card, an insert is included with more information on how to use the new card at chip-enabled terminals. We have also been keeping them informed through our enewsletter and have detailed information on our website about the new technology.”

Using a chip-enabled card at an ATM, while important, is only one aspect of preventing card fraud, George said, adding, “We encourage our customers to use chip terminals at merchants’ point of sale whenever possible.”