Do you work with credit cards? Are you ready for the October 1 credit card fraud liability shift? That’s the date merchants who have not upgraded to EMV chip-enabled equipment on their terminals could become liable for the financial consequences of fraudulent credit card transactions. With credit card fraud now well over $7 billion annually in the United States, missing this equipment upgrade deadline will pose a major risk for many businesses.
What is EMV?
Banks in the United States are switching up the insides of our credit cards. They’re adding something called EMV technology, which stands for “Europay, MasterCard, and Visa.” This means credit cards are created with a super-small computer chip that’s extremely hard to counterfeit. If you’ve gotten a card recently, chances are it has this technology.
Why the changeover? Here’s a crazy statistic: Almost half of the world’s credit card fraud now happens in the United States—even though only a quarter of all credit card transactions happen here. The banks want to rein this in by moving away from magnetic-stripe cards, which are much easier to counterfeit. The recent high-profile security breaches at some of the country’s largest retailers have added motivation to make the switch quickly.
So how exactly will this affect your business? For starters, you’ll need a new processing device to read the information in the chip cards. And come October 1, 2015, businesses that don’t have an EMV processing device could be on the hook for fraudulent chip card transactions.
Is this completely new technology?
No. Most of the world, including Europe, has been using chip cards for years. The United States is actually the last major market still using magnetic-stripe-only cards.
Will chip cards be swiped the same way as magnetic-stripe cards?
No. It’s a new process some people call the “chip-and-dip.” Chip cards are inserted, or “dipped,” into the payment device and left in place for the entire transaction as the reader and card talk back and forth.
What do I need to know about my terminal?
Credit card companies have been issuing the new “chip cards” for some time now, but many merchants have been reluctant to upgrade their point-of-sale terminals to accommodate the shift from a simple card swipe to the “chip and dip” action. If your existing credit card terminal is older and doesn’t have an EMV slot on the front, you will need a new terminal to process the chip-enabled cards. And even if your terminal does have the EMV slot in the front, you need to know that there have been several upgrades to the processing technology that may have already made your upgraded device obsolete. This latter issue applies to many units installed more than six months ago.