The EMV Deadline Is Approaching: How to Protect Your Business From Fraud Liability

Business.com / Financial Solutions / Last Modified: February 22, 2017

The October deadline for EMV credit cards and processing is coming, and merchants are at risk. How to protect yourself from fraud liability.

Small merchants often don’t have the capital or time resources necessary to stay on top of technological changes.

That’s exactly what Visa and MasterCard are counting on—a lack of initiative for the small merchant to shift to EMV (Europay, MasterCard and Visa) card technology. Their latest rule change shifts the liability for fraud onto the merchant if new EMV compliant credit card terminals aren’t used.

The EMV chip enabled credit card creates a unique code that can’t be used in any future credit card transactions, limiting the risk of theft and fraud. If a merchant doesn’t use the new EMV-compatible credit card terminals to accept chip credit cards, Visa and MasterCard will shift the fraud liability onto that merchant’s lap beginning October 15, 2015.

Visa and MasterCard aren’t the only credit card companies counting on mom-and-pop shops' ignorance. In fact, all the major credit card companies are ready and able to point a finger at any merchant who isn’t prepared for EMV card acceptance. 

Related Article: Guide to Accepting Apple Pay at Your Business

What's Stopping Small Businesses?

So, why aren’t small businesses making the move to EMV compatible credit card processing? An American Express EMV Preparedness Survey shows that 57 percent of 500 small business owners cite that cost of new terminals as the main reason why they don’t want to comply with the EMV standard.

The new machines start at around $250 and can go into the tens of thousands of dollars for larger businesses. Another reason to balk at this change is the learning curve involved in handling new equipment. The third and final reason is lack of knowledge about the EMV migration, including the fact that credit card fraud responsibility is shifting to merchants.

Nearly half those merchants surveyed weren’t aware that Visa will shift the fraud responsibility burden will shift to the small business owner if they haven’t upgraded. Publicly, this shift is what Visa calls an “incentive” for motivation to make that change to EMV card processing, however, many suspect that the major credit card providers true motivation is to shift the liability of increasingly common hacking breaches onto the individual small business owner. 

Related Inforgraphic: Don't Be Spastic with Plastic: Why SMBs Should Accept Credit Cards

So now that you’re aware of the problem, we’ve compiled a 3 step checklist that you can do at your business to ensure that you’re EMV compliant:

1. Audit your Existing Hardware

If you’ve received new credit card processing equipment in the last two years, there’s a good chance that your equipment is already EMV compatible, but that the feature is simply not enabled. The easiest way to find out, is to simply Google or Bing search the specific brand and model of terminal that you own along with the phrase “EMV compatible."

For instance searching “Is the Verifone Vx520 EMV Compatible?” will quickly tell you the answer. If it is already compatible, you’re in luck. Simply call your credit card processor and ask them to enable EMV chip credit card payments. They’ll walk you through how to reprogram the terminal, which will take you about 15 minutes to accomplish.

2. Consider Upgrading Instead of Replacing

If you don’t have an EMV chip compatible terminal, you can buy a new one. Prices start around $250 and go up into the tens of thousands. You also have the option of adding an EMV reader to your existing terminal for about $100. The costs vary by vendor, but almost every existing terminal has an add-on option.

The downside is that they’re generally bulky and ugly, so if your terminal is on your countertop where your customers can see it, it’s not ideal. That said, it’s significantly more cost effective. Visa offers advice on technology in their Visa U.S. Merchant EMV Chip Acceptance Readiness Guide, but your credit card processing company might be able to better help you make the changes you need.

3. Shop for a New Credit Card Processor

If you aren’t tied into a long-term contract and aren’t particularly enamored with your credit card processor, this is a good time to shop around. Merchant Negotiators is a online review site that can help when comparing credit card processors.

Some credit card processing companies are using the new EMV change to try to gain new clientele. They’re doing this by offering free EMV hardware to all new customers as an incentive for signing up. For example, Flagship Merchant Services and CreditCardProcessing.com are two large companies offering this promotion.  Consequently, this is a pretty good time to shop around and obtain quotes from a few different providers. If you’re happy with your existing provider, an offer in writing is often enough to get your existing credit card processing company to match the deal and give you the free equipment.

Related Article: Checklist for Credit Card Processing

In the end, the equation is cost vs. benefit. Without EMV chip compatible readers, your business is more susceptible to cyber attacks along with penalties inflicted by credit card companies, such as Visa and Mastercard, for any fraudulent transactions that occur on your end. Moreover, the frequency of attacks against non-EMV compliant merchants is likely to increase as hackers focus their attention on the fewer merchants who haven’t made the upgrade.

Consider the cost as relative: pay now to make the change or pay much more down the road without the upgrades.

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