From the Philadelphia Business Journal
About 75% of merchants at risk without new credit card chip tech
Daniel Acker | Bloomberg
As of Oct. 1, any business processing a credit card in person without an EMV (Europay, MasterCard, Visa) chip card payment process system is on the hook for fraudulent card use. Before October 1, the card issuer held primary liability.
This seemingly minor detail isn’t minor at all. According to an article published in PaymentsSource in 2015, fraudulent liabilities in the United States will exceed about $10 billion this year. Fraud is rampant. The cost of not transitioning to EMV technology could be financially devastating to a business owner.
Unfortunately, many businesses owners are oblivious to the new risk. According to a survey conducted by The Strawhecker Group, only 27 percent of merchants were EMV ready by the October deadline. Fewer than half will be ready by June 2016. Some are simply unaware. Others don’t fully realize the potential impact of fraudulent charges compared to the relative ease of adapting to the new technology.
EMV chip card technology is a global payment system designed to decrease debit and credit card vulnerability during fraudulent in-person transactions. A microprocessor chip about the size of a fingernail is embedded into each EMV card. The chip improves card security, making data more difficult to steal and reuse. EMV chip card technology is common elsewhere in the world and is finally becoming standard in the United States.
Unfortunately, many businesses owners are oblivious to the new risk. According to a survey conducted by The Strawhecker Group, only 27 percent of merchants were EMV ready by the October deadline. Fewer than half will be ready by June 2016. Some are simply unaware. Others don’t fully realize the potential impact of fraudulent charges compared to the relative ease of adapting to the new technology.
EMV chip card technology is a global payment system designed to decrease debit and credit card vulnerability during fraudulent in-person transactions. A microprocessor chip about the size of a fingernail is embedded into each EMV card. The chip improves card security, making data more difficult to steal and reuse. EMV chip card technology is common elsewhere in the world and is finally becoming standard in the United States.
The EMV migration is not a mandated upgrade. However, it is in merchants’ best interest to switch to EMV-capable equipment and software as soon as possible. The top hurdles preventing businesses from becoming EMV compliant include processor readiness, gateway readiness and the need to replace point of sale (POS) terminals.
Ultimately, liability exists with the least compliant EMV party. If a merchant does not have the ability to process EMV chip card technology then liability falls on it. If the merchant processes EMV, but the card used is not an EMV card, or is a fraudulent EMV card, then the liability falls on the card issuer.
Switching to EMV chip card technology should be a priority. Although many companies are delaying or prolonging the process, the minimal cost savings do not offset the new and significant liability risk. Many business owners fear that the transition process is cumbersome and cost prohibitive. Some simply don’t know where to start.
Thankfully, the path to becoming an EMV-compliant business is neither complicated nor difficult. Business owners still in need of EMV technology should contact their payment service provider. From there, their provider will handle most of the transition, working with the business to install new terminals and software. A good payment service provider can accomplish this process in 1-3 days. Most companies will either be charged one up-front price for the new technology (ranging from $200 to $300) or will establish a monthly fee to spread the cost over time.
If your payment service provider does not handle this transition or is unable to do it in a timely manner, do not wait. Contact another provider immediately. The additional party can work on a provisional basis to help your businesses become EMV compliant and avoid liability.
Technology is always evolving. EMV chip card technology is now the most up-to-date and secure credit/debit card processing technology in the market, but it won’t be the last. Working with a flexible payment service provider is imperative to tracking these changes and evolving your business with the technology to stay compliant and avoid fraudulent charges.
Michael Collester is president and CEO of JetPay Strategic Partners. He can be reached at mcollester@acimerchant.com.
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