Originally published in the Tri-Cities Area Journal of Business
Article by Carrie Everman
Merchant Services Manager, Washington Trust Bank
The nationwide transition to EMV chipped credit cards is well underway. EMV technology, which stands for Europay, MasterCard and Visa, adds anti-fraud microchip technology to newly issued debit and credit cards. This is good news for consumers as the shift to the new technology will provide even stronger security for credit card information than the former magnetic stripe technology. Another piece of good news is that consumers do not have to take action to update their credit and debit cards; that responsibility lies with credit card issuers, banks and other financial institutions. Consumers should expect to receive a new EMV credit card or their bank will be issuing one to them in the near future. That aside, this transition is significantly more demanding of small businesses and has serious implications if they don’t make the necessary upgrades by the transition deadline.
Starting October 1, 2015, merchants who have not updated their equipment in order to accept payments from EMV chip cards can be held liable for any fraudulent activity. So, if a small business still relies on the “swipe and sign” method for transactions, they can potentially lose the business as well as be held responsible by credit card companies for any resulting fraud. Considering that the total liability for credit card fraud in 2015 is projected to reach $10 billion, it puts merchants who haven’t implemented the new EMV technology at significant risk. Despite these stakes, many small business owners are unaware of the potential costs of not meeting the new standards.
In order to best protect themselves, merchants should put the following steps into practice in advance of October’s EMV liability shift.
If you haven’t begun preparing for transition, don’t panic! You still have time to act. It will just require some urgency in order to acquire the right readers, update applications, and deploy the appropriate smartcard technology before the October 1 deadline. The first step is to determine what your business needs to update in order to meet these new EMV guidelines. There are plenty of resources online that offer a good overview. Visa in particular has developed a helpful Merchant EMV Chip Readiness Guide that has insight for those looking to learn more about what is being asked of small businesses.
However, a merchant’s best bet is to get in touch with their bank/payment processor directly. If they haven’t contacted you, don’t hesitate to reach out to them. Having an expert on hand to identify a business’ specific transition needs will make the process much more seamless. It’s even possible that they may save you from spending on upgrades that aren’t needed. For example, a business might find that the EMV standard doesn’t affect their business given that they don’t take cards in a card-present environment.
If your business accepts card-present credit card transactions, it’s not enough to merely upgrade the equipment; the process of accepting a card for payment has changed as well. EMV chip cards are produced with both a chip and a magnetic stripe. EMV readers can process transactions by either the new “dip” method (which reads the chip) or with the traditional swipe method (which reads the magnetic stripe.) This means that any transaction that is processed by swiping – even if the card has a chip and the reader is EMV enabled – still bears the liability for any fraud.
This makes it essential for businesses to educate staff on how to run transactions using the new equipment. If they understand that this new method is what protects their business from credit card fraud, they’ll be that much more willing to put the new approach into practice.
Get Started Now
The October 1 liability shift deadline is right around the corner, so it’s important for businesses to move forward with an EMV transition plan quickly in order to protect themselves. Implementing the necessary steps to upgrade credit card processing might seem inconvenient, but it’s worth knowing that many other businesses may also wait until the last minute to upgrade. While supply of chip-enabled POS equipment isn’t an issue right now, it’s very possible that it could become an issue as the October deadline nears. It would be very unfortunate if a business was put at risk with every credit card transaction because the EMV readers they need are on backorder.
Carrie Everman is the Assistant Vice President and Manager of Merchant Services for Washington Trust Bank. Her team has been responsible for reaching out to the bank’s merchant services customers across Washington, Idaho and Oregon to educate and guide them through EMV chip transition, as well as help businesses owners to protect themselves from liability. She can be reached at CEverman@watrust.com.
Washington Trust Bank.