By now, U.S. consumers are starting to receive replacement credit and debit cards with embedded chip technology in the mail, if they haven't already. These EMV cards—EMV stands for Europay, MasterCard and Visa—make it tougher to commit credit card fraud. Used in other countries for years, the technology also helps small businesses avoid getting stung by new payment industry rules that will take effect on Oct. 1.
On that date, the so-called liability shift kicks in. "Today, the [card] issuers are liable if there's any counterfeit fraud on a card," explained Stephanie Ericksen, vice president of global risk products at Visa in an interview with Small Business Computing. Come Oct.1, "the merchant may be liable for the charge back" if fraud occurs using the old swipe-and-sign method, she continued. Similar rules will affect ATMs and gas pumps in 2016 and 2017, respectively.
Obviously, no small business wants to be on the hook for an illicit shopping spree. EMV cards generate a "code that changes with each transaction," throwing a wrench into schemes that involve cloning traditional magnetic-stripe cards, said Ericksen. The EVM technology prevents criminals from making counterfeit cards which, according to Erikson, accounts for two-thirds of the fraud that the credit card payment industry wrestles with annually.
EMV Transition Tips for Small Business
Admittedly, the switch to EMV may seem daunting for businesses that have been swiping cards and collecting signatures for decades. But the road to EMV-compliance can be surprisingly smooth with a little preparation and some good old-fashioned business smarts, said Ericksen.
1. Use the Technology You Already Own
Evaluate your current point-of-sale and payments systems before embarking on a costly replacement project. Chances are that you can make them support EMV cards with little effort.
Small businesses that purchased their POS equipment over the past few years may be in for a pleasant surprise, said Ericksen. "Many of them already have terminals that can read the chip, but they may need a software upgrade."
2. Treat Payment Processing Like a Cell Phone Plan
If your current gear isn't up to snuff, there's no need to panic. However, it's time to hit the negotiating table.
During the EMV switch, it pays to revisit the terms of your point-of-sale and payment processing agreements. "It's kind of like upgrading your phone. You go to your carrier, upgrade and get a better contract," said Ericksen. Take the same approach with payment systems vendors, and you may score big savings over the long haul.
3. Shop Around
You may end up biting the bullet and investing in new payment processing gear. Fortunately, there's no shortage of low-cost solutions, including Square's $49 EMV-compatible card reader.
Ericksen also suggests letting payment processors earn your businesses. "Some are offering free terminals to merchants," she said. And since those terminals are rarely integrated into major systems at small merchants, incorporating them is often a plug-and-play affair.
4. Use EMV Compliance to Court Consumers
Made the switch to EMV? Let prospective customers know.
"Eighty-three percent of consumers are aware of chip-and-pin technology," a form of EMV, said Ericksen. For small businesses operating in touristy areas, EMV is an opportunity to attract international card holders.
"It's what they're accustomed to using. They're very familiar with it," said Ericksen. EMV support also signals that a "merchant is interested in security" eliminating a major worry for travelers, she added.
5. Get up to Speed
At the very least, small business owners should explore the topic along with their options. Visa has put together its own resource site at VisaChip, providing access to a merchant toolkit and sales-staff training materials. The industry website GoChipCard also offers pointers to consumers, merchants and credit card issuers.
Pedro Hernandez is a contributing editor at Small Business Computing. Follow him on Twitter @ecoINSITE.
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