Are You Ready for EMV?
By SBE Council at 23 April, 2015, 9:04 am
By Barbara Weltman-
No, this is not a brand of car or model type. EMV, which stands for Europay, MasterCard, and Visa, is a chip-and-pin technology for credit/debit cards. Also referred to as smart cards, EMV technology replaces the current strip that appears at the back of cards in the United States (Europe and most of the world went EMV years ago). Canada made the switch in 2008 and saw a dramatic decline in credit card fraud. Here’s what you should know about EMV and how to get ready to accept this new payment technology.
Overview of EMV and Merchant Liability
EMVs are designed to make things more secure for the cardholder by means of a number of technologies the chip enables. This security applies to those who present their cards in person; merchants that process only online transactions (i.e.., don’t swipe cards) need not be concerned.
From the merchant perspective, changing to EMV-acceptance terminals is necessitated by a shift in liability that’s about to occur. At present, the cost of a fraud (e.g., erroneous purchases on a credit card) is borne by the credit card processor (e.g., the bank or other processor). However, starting October 1, 2015, liability shifts to merchants that do not process transactions using EMV technology. In other words, merchants — retailers, dry cleaners, restaurants, medical offices, and other businesses within the U.S. (many of which are small businesses) — are going to be on the hook for chargebacks from fraudulent activities. For counterfeit card fraud and for lost and stolen fraud on American Express, Discover, and MasterCard cards, liability will shift to merchants when a lost or stolen EMV card is used at a non-EMV compliant POS (point of sale) terminal; for Visa, the card issuer will continue to be liable for lost and stolen fraud. (Many believe this date could be pushed back at least 12 to 18 months because so many businesses — large and small — aren’t prepared for the changeover.)
Businesses that do card-present transactions need EMV terminals at every point of processing (e.g., a store with three cash registers needs three EMV terminals). The cost varies with the manufacturer (there are units starting at about $150).
What About Square and Other Mobile Swipes?
There are EMV alternatives for mobile processing. For example, the Square EMV costs $29.
What To Do Now
Currently, the majority of small businesses are not prepared to make the transition to EMV. The first step is becoming informed about EMV. Here are some resources to help:
The next step is to talk with your current card processor to find out about when and how you can migrate to EMV. I’m not a technology expert, so there are many questions about the transition that I can’t answer (e.g., what happens if you have an EMV terminal but a customer presents a credit card with a strip and not a chip?). Just consider the bottom line: You’ll have to make the changeover to avoid liability in the future, so get the information and help you need to do this correctly.
Becoming EMV-ready is not mandated by any law or regulatory authority; it’s necessary only as a protection against liability. What’s more, EMV is not a panacea for consumer protection with respect to credit cards. EMV does not secure cardholder data, so if you store this information you’ll need to use good business practices (e.g., encryption) to protect it. And then there’s tokenization, which will be explained in an article to come!
Visa Guidebook: Visa U.S. Merchant EMV Chip Acceptance Readiness Guide – 10 Steps to Planning Chip Implementation for Contact and Contactless Transactions.
EMV Key Dates Chart– Card Networks
Introducing Visa Chip Technology: Confidence in a Smarter World
Barbara Weltman provides complimentary resources to small business owners and entrepreneurs through various platforms. She is the publisher of Idea of the Day® and monthly e-newsletter Big Ideas for Small Business® at BarbaraWeltman.com. Newsletter sign up: Click Here. Idea of the Day® sign up: Click Here. She also co-hosts Business Leaders radio, and is a member of SBE Council’s Advisory Board. Follow Weltman on Twitter @BarbaraWeltman.