Credit and debit card fraud is a huge problem for businesses, consumers and financial institutions around the world. Business Insider Intelligence estimates that it’s at $14 billion a year and growing fast, with about half of that happening in the U.S. And it’s growing quicker in the U.S. than anywhere else.
That’s why, starting October 1, payment networks such as MasterCard, Visa and American Express are implementing a liability shift, which had been absorbed by card issuers, to any businesses not accepting EMV. EMV – which stands for Europay, MasterCard and Visa – is a global standard for the use of cards that have a microchip embedded on the card’s face. It adds another layer of security to the payment system by creating a unique, one-time code for each point-of-sale (POS) transaction that makes it almost impossible to counterfeit the chip.
As American inventor and founding father, Benjamin Franklin said, “You may delay, but time will not.” His warning is especially relevant today for thousands of American small businesses that are not prepared to accept payment with the new EMV chip cards, which could leave them on the hook for certain fraudulent transactions.
But with today’s liability shift, it’s inevitable that many small businesses won’t be ready. The longer they delay, the greater the risk they face of getting stung by a costly counterfeit and lost or stolen fraudulent transaction. For businesses that aren’t ready yet, here are three things to do:
1. Make becoming EMV ready a priority
Ignoring the issue may not be a workable strategy. Find out what you need to do. There are many excellent online resources to help you understand the workings and benefits of EMV, including Chase’s website. The institution that processes your payments will be able to tell you what equipment changes you may need to implement to be able to accept chip card payments and be trained on its use.
2. Create a plan
Deadlines that may have an associated cost can create a sense of urgency or even panic. In addition to understanding how the liability shift will affect your business, you need to define the steps you will take to become EMV ready. Even if you are late to the EMV game, take a breath and build a plan. Work with your payment processor to identify what needs to be done, in what order, by what time and then act.
Perhaps this is an opportunity to do more than meet the minimum requirement. There are other innovations in the payments pipeline, such as the support of contactless tap-and-go payment or digital wallets on smartphones. This might be a good time to learn about and prepare for accepting these types of emerging payments.
3. Train your staff on accepting EMV cards
Chip technology will affect how you do business, whether you are EMV-ready or not. Card issuers have provided tens of millions of EMV cards to consumers. You and your staff need to know how to accept EMV cards when presented for payment, regardless of the equipment you have. Consumers will also be getting used to the new purchase process therefore, training your employees to assist and advise customers in using their chip-enabled cards will reduce their stress and ensure easier and faster customer experiences.
The good news is that EMV technology works. It has reduced counterfeit fraud in more than 80 countries around the world, some for close to 15 years, and it is a stepping stone to new payment methods, like contactless tap-and-go and payment through mobile smartphone apps.