The restaurant industry has begun preparing for a big change in credit card technology and policies that will affect retail merchants in October 2015, both in economic terms and in operations.

Major credit card companies have announced incentives for merchants to change their point-of-sale systems by October 2015 amid a backdrop of credit card fraud that affected millions of department store shoppers, especially those at Target and Neiman Marcus, during the winter holidays.

Such changes would allow restaurants to accommodate the EMV standard that is widely followed outside of the United States and are aimed at better protecting merchants and issuers from fraud losses at the point of sale.

EMV, named after its developers (Europay, MasterCard and Visa), requires cards that have embedded microprocessor chips that store and protect encrypted user data instead of the magnetic strip widely used in the U.S. The chip in the card generates a one-time code for each transaction, which makes it more difficult to a counterfeit. Another layer of security can be added with a personal identification number, or PIN, or a signature, but currently, that layer is not required.

However, many in the restaurant industry are not convinced that the payment standard is the fraud solution some are touting it to be. “EMV technology protects against counterfeit cards to some degree, but it’s not a silver bullet for fraud,” said Liz Garner, the National Restaurant Association’s director of commerce and entrepreneurship.

Garner also noted that because of the investment required for operators, the restaurant industry is hoping for a more secure solution, including the possible inclusion of a PIN requirement.

“There is no reason there should be a payment device out there that the merchant can’t ask for a second layer of security on, especially in a world where we have passwords for everything, from an ATM withdrawal to signing in to an Internet account,” she said. “The worldwide standard is chip-and-PIN cards. Without issuing cards with PINs, it makes very little sense from fraud prevention and a lost-and-stolen type environment.”

David French, senior vice president for governmental relations at the National Retail Federation, said in a recent webinar that the chipped cards cost the issuing companies between four and 10 times as much as the long-used magnetic strip cards, and new chip-enabled hardware could cost the retail industry between $20 billion and $30 billion in total.

Card issuers are offering various incentives to merchants that comply with the EMV standard by October 2015. They include the elimination of the requirement that merchants with chip-enabled terminals annually validate compliance with the Payment Card Industry Data Security Standard, as well as protection from fraud liability.

Credit card companies are also warning of penalties for merchants who have not made the investment in chip-enabled technology. Policies vary among companies, but they all include further shifts in fraud liability from the card issuer to the merchant.

Garner noted that the merchant community already bears a third to half of the fraud losses, depending on the type of transaction.