You may have heard about the Oct. 1 deadline for the United States’ transition from magnetic-swiped credit and debit cards to more secure computer-chip cards, designed to specifically combat card-related financial fraud, which is estimated to cost $8.6 billion per year.
What did this deadline mean for small businesses and consumers?
This deadline didn’t require any change in consumer purchasing methods (other than inserting a “chip card” in the bottom of a reader as opposed to swiping it through the side), nor does it prevent anyone with a non-chip card from making purchases.
From the consumer standpoint, the EMV-chip cards and transactions, named for the companies that created the standard (EuroPay, MasterCard, and Visa), largely just provide a more secure transaction. Most issuers are in the process of replacing the estimated 1 billion electronic payment cards out in the world.
The Oct. 1 deadline represented a monumental shift for merchants and card issuers in the area of liability.
After Oct. 1, if a chip card is swiped at a business that has a terminal that doesn’t accept chip cards, the fraud liability can shift to the business owner’s payment processor, as opposed to the card issuer. The processor, also known as the acquirer, can then transfer the resulting fee back to the business.
The liability shift is designed to encourage adoption of chip-certified terminals by businesses since any chip-on-chip transaction (chip card read by a chip-certified terminal) provides dynamic authentication data designed to better protect all parties.
“EMV offers enhanced security and fraud protection and reduces the cost of charge backs to the business owner,” said Deanna Karhuniemi, vice president of EMV Strategy for Chase Commerce Solutions. “Chip card technology is virtually impossible to copy making it a great solution to prevent counterfeit fraud.”
Here are five questions and answers from Karhuniemi to help prepare small businesses for this new, more secure frontier in electronic transactions.
1. Why is this transition so important?
Fraud and security threats facing consumer payments today are a complex issue that can’t be fixed by any single technology. The transition to using EMV chip card technology is an important step in protecting consumers and businesses from fraud.
The new cards have an embedded chip that adds another layer of security during a chip transaction by producing a single-use code to validate the transaction. This process makes chip card information more difficult to steal and therefore makes a chip card more difficult to counterfeit. With the start of the liability shift on Oct. 1, businesses that are not prepared to accept chip technology will assume liability for any card-present counterfeit and potentially lost or stolen fraud that occurs.
2. Now that the Oct. 1 merchant full liability deadline has passed, what would you tell small business owners that have yet to implement the required equipment in their businesses?
Our recommendation to our existing and prospective clients is to update their point-of-sale (POS) terminals to be able to accept all types of Cardholder Verification Methods (CVM) for all major payment brands. The inconvenience and ramifications of card fraud outweigh any inconvenience a small business owner would experience by upgrading payment systems.
If you’re a small business owner and haven’t upgraded your system, talk with your payment provider about the steps you need to take and build a plan that you’re comfortable with, taking into account any risks you may need to assume while you don’t have a chip reader. Once the new payment system is implemented, make sure you and your employees get the training needed to answer any questions from customers and to implement the technology correctly.
If you think your system does accept chip cards, check with your payment processor to determine if your POS terminal supports EMV and whether you have the right software installed.
3. What help does Chase offer to businesses looking to update their systems?
Chase Commerce Solutions provides a POS terminal called Future Proof that allows businesses to accept current and quickly emerging forms of customer payments all in one streamlined device.
This means small businesses can be prepared to accept EMV, as well as mobile payments like Apple Pay. Chase Commerce Solutions has issued more than 45,000 EMV-ready terminals in the United States. Chase also offers an EMV-ready Bluetooth pay-at-the-table POS solution that offers restaurants the convenience of allowing their patrons to use their chip issued card for payment at their table.
4. How has Chase helped with educating small business owners and the public about this change?
As an issuer and an acquirer, Chase is in a unique position to educate customers and businesses and get them prepared to use or accept chip-technology at the register or at an ATM. Chase is constantly working to implement new technologies to fight future threats.
We continue to educate cardholders and businesses through various channels and as of mid-September, Chase has issued about 61 million chip-enabled cards (about 49 million credit and 12 million debit cards).
We’re attempting to make the transition as seamless as possible for businesses by including simple educational resources at our site: https://www.chase.com/chip/business and via our EMV specialists available at 1-800-533-4912.
-Written by Josh Coddington marketing and communications manager for the Greater Phoenix Chamber of Commerce.