This October marks a major point in history for the payment industry as card brands are making some major changes. The first stage goes into effect to convert the United States from magnetic stripe credit cards to the more secure chip-embossed EMV smart cards. And if you’re not ready, it could be detrimental to your business.
Why the change? The United States has more credit card fraud than any other country and has seen numerous large-scale data breaches just in the past few years alone. A data breach can cost millions of dollars which is devastating to any business. EMV—which stands for Europay, MasterCard and Visa—is a global standard for cards equipped with computer chips and the technology used to authenticate chip-card transactions. Card issuers have already implemented the roll-out of chip cards to customers as most of us are already carrying chip cards in our wallets. So what does that mean to you merchants and consumers?
Today Visa and MasterCard accepts liability if there is a breach and the business has done its due diligence to protect itself from fraud. After October, however, merchants must have new in-store technology and internal processing systems. In addition, the new liability rules mean that the liability shifts to the business with no questions asked. For consumers, it means activating new cards and learning new payment processes. This is the first in a series of changes that will occur which is aimed at retail establishments only. Currently there are no changes for online businesses.
The migration to EMV chip cards is probably the biggest change the payment industry has seen since moving to electronic processing 30 years ago. And as a result of these changes, retail businesses need to start asking their merchant service vendors about upgrading their equipment. But be careful, as some vendors could see this as an opportunity to surcharge or gouge customers, so make sure you do your homework.
As an advocate for the merchant service industry and a longtime pro-business advocate, I have been discussing the changes with local business owners and how it will affect them. Migrating to new technologies such as the nationwide shift to EMV can be daunting, but it means greater protection against fraud. It’s an important step forward and businesses of all sizes need to be aware of what it means for them. The risks are too high to just sit back and assume everything is fine.