Don't miss the switch: Why credit card chip technology matters
Ready or not, here it comes. The nationwide transition to EMV technology — short for Europay, MasterCard and Visa — is happening and all small businesses are expected to comply.
EMV is a global standard for credit and debit cards equipped with computer chips, and the card readers used to complete transactions. Instead of using a magnetic strip that is prone to fraud, these cards and card readers use a computer chip that creates a unique code for each transaction. This way if a credit card hacker steals chip information from a particular point of sale, they would be unable to use that information to make other purchases since the unique transaction number would be unusable.
Though this new technology doesn’t entirely prevent hacking, it does prevent a hacker from being able to use the credit card information that they obtain. Currently almost half of the world’s credit card fraud happens within the United States, according to the website Cardhub.com. Chip technology is currently being used worldwide, and experts are hopeful that implementing this new technology will dramatically reduce the amount of fraud that happens within the U.S.
This change in technology has a significant impact not only on cyber security, but also on small businesses. Any business that accepts bank cards as a form of payment is required to upgrade to an EMV card reader by Oct. 1. Instead of swiping to pay, customers will now “dip” their credit card into the payment device and then remove it after the transaction is completed. Intuit Quickbooks, Square and many other companies are launching EMV readers — including mobile readers — that businesses can purchase and begin using immediately.
The reason EMV technology has been getting so much attention is due to the looming Oct. 1 deadline for businesses to switch to EMV readers. This deadline was created by MasterCard, Visa, Discover and American Express, and comes with important liability changes. Currently, if your business runs a fraudulent card for a charge, banks absorb the cost of that charge. After Oct. 1, if someone tries to pay with a fraudulent chip card and you don’t have an EMV card reader, your business is liable for the fraudulent charge instead of the bank.
“We’re concerned that most small businesses are unaware of the implications of this shift in technology,” said Keith Brophy, state director of the Michigan Small Business Development Center. “Adopting the new EMV reader protects your business from a significant liability.”
In fact, according to a recent study performed by Intuit, 42 percent of small business owners have not heard of the EMV liability shift deadline, and 85 percent of small business owners who will not migrate to the new system, or are undecided, are unaware of the financial and legal liabilities for which they will be responsible.
Businesses concerned with the cost of upgrading their systems should know that there are a variety of EMV-friendly point of sale systems available. Card-payment volume is set to increase by more than 50 percent by 2018, so transitioning to this new payment method is the safest and best bet to protect your business. Interested in learning more? Check out emv-connection.com.