With the EMV liability shift coming soon, many small businesses are still unprepared for the shift. Beginning October 1, 2015, merchants who do not accept EMV chip cards will be held responsible for any credit card fraud that happens during the point of sale. Small businesses need to begin preparing now to take steps to transition to EMV or risk costly penalties.
According to an Intuit survey, 64 percent of small businesses know of EMV, but only 42 percent will be committed to accepting EMV payments. Additionally, only 19 percent were aware of the October liability shift.
Perhaps the biggest hurdle for merchants wanting to switch to EMV compatible products is the price. New hardware can cost a business hundreds of dollars. However, the price for upgrading to EMV capable products would be significantly smaller than having to pay costly fines in an incident of fraud. One study showed that 63 percent of small businesses surveyed claimed some level of credit card fraud on an annual basis, with an average of 7 percent of those transactions being fraudulent.
“The biggest barriers for small businesses to become EMV compliant are cost and lack of time or resources required to research terminals,” spoke Intuit senior vice president, Eric Dunn.
Some of the main reasons business owners plan to not upgrade their payment terminals in time for the October liability shift include:
- 48 percent feel that upgrading their payment terminals will not affect their business
- 46 percent do not want to pay the costs associated with upgrading their equipment
- 41 percent are not concerned about the liability shift in the instance of fraud
"Liability shifts have been used very effectively around the world and what they do is instead of a hard mandate that would require all businesses—both issuing banks and merchants—to transition quickly at the same time, it allows each business to make their own decision about the investment to migrate as well as any resulting costs and liabilities," spoke Carolyn Balfany, senior vice president of product delivery-EMV, MasterCard.
Should Small Businesses Switch?
Although October marks the beginning of EMV card liability shift, businesses will not be forced to upgrade their terminals to accept chip cards. In fact, the new chip cards will still contain a magnetic stripe on the back, allowing businesses to swipe the cards if needed.
Small businesses should still evaluate not only the cost of switching to EMV technology, but also the probability of fraud occurring within their company. For instance, jewelry stores are a specific industry that may be more susceptible to fraud. Likewise, if a small business is up due to renew or purchase a new EMV terminal, it would make more sense to go ahead and invest in EMV technology so your business stays up-to-date with modern technology.
Another reason small businesses should make the switch to EMV technology is that American consumers are ready for the EMV shift. A recent survey from MasterCard showed that 77 percent of consumers are worried about the security of their financial information. Businesses can help reassure the safety and protection of their customer’s financial information by installing EMV technology.
"Consumers actually expect merchants to upgrade and what consumers tell us is that they see a merchant that upgrades more positively because they see them as being willing to invest in their security," spoke Balfany.
Although many small businesses will not be ready for the October 1st liability shift, it should still be an easy decision to go ahead and upgrade now. EMV technology is the future for payment processing and will be a great tool to protect both the consumer and the merchant from fraudulent chargers.