The EMV liability shift took place almost a year ago, but many businesses still haven't upgraded to EMV equipment. Here's what to do.
By now, you’ve probably noticed that more people in the United States have EMV cards: credit and debit cards with a small electronic “chip” embedded in the plastic.
You’ve probably also noticed that the chip card rollout was met with confusion, annoyance, and uncertainty about how to accept them.
Slowly, both consumers and businesses are making sense of the switch, but many businesses delayed purchasing a chip card reader, and some still haven’t. If that’s you, here’s what you need to know as an EMV “holdout” and how to make the leap to accepting EMV cards.
Related Article:EMV 101: What You Need to Process Credit Cards Today
Your Business Is Liable for Fraud
The official “liability shift” for EMV chip credit cards happened in October 2015, but as the time of this article’s publication, there are plenty of businesses that haven’t switched. Unfortunately, that opens those businesses up to a much greater liability.
If you take a chip credit card at your business but run it as a magnetic strip card, you’re on the hook for fraud (including “friendly fraud” where the customer initiates a chargeback on a legitimate purchase) with that card.
Originally, some businesses didn’t feel that was enough of a risk to justify spending money on a new machine. The reasoning was that their business didn’t get many chargebacks, so they’d take a gamble.
Unfortunately, that has been a losing proposition for some businesses, which have seen a sharp increase in chargebacks and in their costs. One grocery chain in Florida alleges that it has accumulated more than $10,000 in multiple chargebacks over about four months, and is subsequently pursuing a lawsuit alleging that the card brands set businesses up to fail.
EMV With Countertop Machines and POS Systems
By now, there are plenty of choices for traditional countertop credit card machines and POS systems that accept EMV chip cards, though you may experience a slight delay getting it set up through your processing company. However, that doesn’t mean that you can’t purchase your machine(s) now.
For small businesses that only need one countertop machine, expect to pay around $300 to $700 for your terminal, depending on the features you want and where you purchase it. Some models include premium features such as Bluetooth connections, color LCD screens, and built-in receipt printers.
EMV for POS systems can be a little more complicated, but many processing companies and equipment manufacturers have figured out options to ease the pain. Some allow you to simply add an EMV-capable machine to your existing POS, eliminating the need for a complete upgrade or switch to a new system.
Related Article: 5 Things Most Small Businesses Don’t Know About Payment Processing
In both cases, be sure to check with your processor before purchasing anything, as you’ll want to ensure that you get a machine compatible with your processor.
EMV Requirements Apply to Mobile Processing, Too
Businesses that take credit cards using a smartphone or tablet with a reader attached via headphone jack fall under the fraud liability, same as businesses with traditional credit card machines and POS systems. This means that if you use Square, PayPal Here, or any of the variety of universal devices for taking credit cards with a smartphone, you need to have a chip card headphone jack reader to avoid the fraud liability.
Fortunately, there are several models available now, including a magstripe/EMV combo from Square, a combo from PayPal Here that also includes a PIN pad for accepting PIN debit cards, and a whole line of universal choices from AnywhereCommerce.
The previous readers you’ve used to accept magstripe cards may have been free of charge; EMV headphone jack readers will likely cost you a small sum. At the time of publication, popular brands are running from $29 to $149, depending on features. Some models offer PIN pad entry for debit cards, Bluetooth connection instead or (or in addition to) headphone jack connections, and NFC (contactless) capability that allow you to accept digital wallets like Apple Pay.
While some brands and models are universal, it’s still important to get a card reader that works with your processing company, so if you’re not sure which one to go with, contact them before buying or utilize a credit card reader directory for info on compatibility.
EMV and E-commerce Websites
EMV chip cards only affect in-person transactions; they neither prevent fraud in online transactions nor are E-commerce-only businesses subject to the EMV liability shift, since there is no special equipment for taking EMV cards online.
However, in other countries, when EMV chip cards have rolled out to increase in-person security, online fraud has risen. As it gets harder to steal card information in-person or clone cards, thieves often turn to other avenues, including the Internet.
If you run an E-commerce website (whether it’s in addition to a brick-and-mortar store or you solely sell online) EMV chip cards could have a very real impact on your business. Be sure to take advantage of available anti-fraud tools, monitor suspicious activity, and work with your processor to help protect yourself and your customers.