Square is working on a chip-friendly credit card reader

For the entire credit card industry, everything old is about to be new again. And Square, the e-commerce start-up, wants to cash in on the opportunity. The company, based in San Francisco, plans to introduce a new version of its credit card reader hardware next year, a device that the company hopes many small and medium-size businesses will quickly adopt. The reader will look much the same as the current one, about the size of a box of matches; it’s what’s inside that counts. Square’s new reader will be compatible with microchip-enabled credit cards. The microchip technology, commonly referred to as E.M.V. (short for Europay, Mastercard and Visa), communicates with payments processors to determine whether the card is counterfeit every time it is used to make a purchase. Merchants in many countries around the world have already adopted E.M.V. technology and can process the chip-enhanced cards. The United States, however, is behind on its adoption. And to push American businesses to catch up, credit card companies have given merchants a deadline of October 2015. Beyond that, every time a business that hasn’t shifted to an E.M.V.-enabled reader processes a counterfeit credit card, that business ends up liable for those fraudulent charges.