Starting in October 2015, many merchants will be utilizing EMV technology, a new payment method that will keep credit cards more secure. The transition to EMV technology will be due to a liability shift to the merchant in the instance of a counterfeit or fraudulent card being used in a non-EMV terminal. If that scenario happens, the merchant will become financially responsible. Small businesses need to begin preparing now to take steps to transition to EMV or risk costly penalties. Learn what EMV is and how converting to EMV-capable payment processing products will help you as a merchant.
What is EMV?
EMV (Europay, MasterCard, Visa) is a fraud-reducing technology helped to protect issuers, merchants and consumers against losses from the use of counterfeit or stolen payment cards at the point-of-sale. This technology has been present in Europe already for almost a decade with great success on keeping cardholder information secure. With EMV technology, cardholder information is stored in a chip that is embedded in the card. Rather than swiping a card at the point of sale, customers will now insert their card into the terminal and a unique, one-time-use code will be generated for that transaction.
Preparing Your Business for EMV Technology
To help protect yourself as a small business merchant from any liability starting in October, you will want to upgrade your Point-of-Sale (POS) systems or terminal(s), including any mobile processing devices, to EMV products. Although this may seem like a hassle to have to buy new equipment for your business and teach your employees a new transaction process, in the long run converting to EMV products could protect your small business.
Why Should I Switch to EMV Compatible Products?
Currently when an in-store transaction is conducted using a counterfeit, stolen or compromised card, the payment processor or consumer’s bank is responsible for the losses. When the liability shift happens in October 2015, the responsibility will shift to the party that is the least EMV compliant in the fraudulent charge, typically the merchant who has not switched to EMV chip technology. As a merchant, that means you could be fully responsible for a fraudulent transaction, which could be detrimental to the future of your business.
It should be important to note that EMV will be only accessible for in-person transactions at this time– any payments made online, over the phone, or by mail are not protected by this technology, and can make these transactions more susceptible to fraud. In fact, experts predict there will be a rise in card-not-present (CNP) fraud transactions once EMV technology emerges. Merchants who primarily do transactions with CNP can help prevent such fraudulent charges by using AVS match (address verification), and requesting the CVV2 security codes on cards.
For small businesses, the switch to EMV technology should be an easy decision to make due to the heightened sense of security to protect your company. As a result, it is clear EMV technology will be a good thing for future payment processing in safeguarding both the consumer and merchant.