What your business should do now about chip cards
At the end of April, Target announced it would implement chip-based credit cards by early 2015. For any small business owner who accepts credit cards, that announcement should have been a wake-up call to upgrade your card processing systems.
The shift to EMV (Europay, Mastercard, and Visa) chip cards and card readers over the next 18 months will mean more secure transactions for consumers and businesses. The move to EMV chip cards will also shift liability: Businesses that cannot accept chip cards could assume the burden for financial losses from card-present fraud.
That’s why I’ve been saying for a few months now that if your business accepts credit and debit card payments, you should be planning now for the industrywide conversion to EMV coming next year.Follow the leader
Target is leading the charge through a $100-million initiative to install new payment terminals in its nearly 1,800 stores by this September. By early next year, Target will enable all of its REDcards with chip-and-PIN technology and begin accepting payments from all chip-enabled cards in its stores.
What you as a business owner need to know is EMV chip technology is coming, and you should consider upgrading your card processing infrastructure sooner rather than later. Fraudsters look for weak links, and so I wouldn’t be surprised if they try to take advantage of merchants that don’t upgrade since it will be easier to use counterfeit cards at locations using mag-stripe terminals.
Beginning in October 2015, your business could bear much of the financial burden for debit and credit card present fraud. Today, when a card-present (i.e., the card is physically used in the transaction) fraudulent purchase is made with a magnetic stripe card, banks are responsible for the losses. Visa, MasterCard and American Express have laid out a timeframe to shift that liability. Beginning in 2015, if the bank and the transaction processor have implemented EMV chip cards and your business cannot accept EMV chip cards, then your business could assume liability for any card-present fraud losses.Considerations for your planning
Now is a good time to start upgrading your systems. If yours is a relatively small business with just one location, you may only need to get a new payment processing terminal to accept EMV chip cards.
But, what if you have multiple locations — say, a small chain of restaurants or hotels with five or 10 or 20 locations? You will need to buy new terminals for all your locations. And, if your terminals are tied to your accounting system, you will need to integrate EMV technology with that system. This will require time and expertise and, obviously, money.
A retailer with multiple stores could have to install new cash registers and inventory systems, and possibly new computers and servers, test the entire system, and train employees. Given the time involved in each of those steps, I recommend businesses start now to be chip-and-PIN enabled by the fall of 2015.