Everything You Need to Know About Accepting Chip Cards

EMV, which stands for Europay, Mastercard, Visa, is a unique and high-tech payment method that is sweeping across the country and beyond. It involves the use of embedded microchips installed in consumers’ credit or debit cards. The purpose of the chip cards is to prevent many types of credit and debit card fraud that historically affects many consumers each year. Many banks and credit card companies have already issued cards with EMV chips in them to their account holders, and you may be wondering what it takes to convert your business’s payment system in order to accept the chip cards or if this is even necessary.

What U.S. Law Says About Chip Readers

If you conduct business in the United States, you need to be aware of a law that went into effect in October 2015. Under this federal law, your business is required to accept chip credit cards through an updated terminal or be responsible for fraud liability issues that arise as the result of not using the updated technology. Up until October 2015, credit card companies were liable for issues of credit card fraud. However, under the new law, if your business fails to use the chip reader technology, it becomes liable for credit card fraud expenses for each transaction. You can still use your non-chip credit card terminal to accept payments, but liability will fall on your business’s shoulders.

Some Credit Card Companies Offer Transition Assistance for Small Businesses

It may seem like the process to convert your credit card terminals would be a costly burden. After all, in the retail sector, food service industry and more, the profit margin is relatively slim for businesses in most cases. Small businesses may seemingly be at even a greater disadvantage in this area, but keep in mind some credit card companies offer transition assistance designed to help small businesses update their technology on a dime. For example, American Express is offering qualified businesses a $100 rebate for making the switch. This takes the liability associated with fraud off your shoulders and puts money back in your pocket to partially reimburse you for the terminal cost.

Your Costs May Not Be as Significant as You Might Think

Many larger retailers have already made the switch to chip reader terminals, but this is less common in smaller businesses. Some smaller businesses have not even considered the possibility yet because the perceived cost is too high. However, small businesses often only need to replace one or a handful of terminals, so this may be more cost-effective than you might think. Furthermore, larger merchants may require special setup assistance to upgrade the software that can be costly in some instances, but smaller merchants often have a plug-in setup process that takes only a minute to complete and that requires no additional fees.

What It Says About Your Level of Customer Service

Many consumers are well-aware of the dangers and risks associated with credit card fraud, and they have been educated by now about the benefits associated with using a chipped credit card. More than that, many know that it is up to the retailer, restaurant or other service provider to install a chip reader terminal. When you fail to upgrade your terminals, you may inadvertently be giving your customers the impression that you do not care about their cyber security or financial protection. There are many instances when large retailers have had their systems breached and credit card data on consumers was stolen. These public relations nightmares caused lagging sales for the retailers in some cases. This type of issue can cause lagging sales that may be difficult for your business to bear. In the event you are dealing with the liability of fraud as well, you may have significantly higher expenses as well as lower income at the same time.

Why Some Retailer Have Chip Readers But Do Not Accept Them

As a consumer yourself, you may have noticed that many retailers have upgraded to the EMV terminals, but they may have a sign taped over the reader that instructs you to swipe your card as usual. An EMV terminal may cost approximately $500 to purchase and the liability they face by not using them can be significant. This begs the question of why retailers who have invested in the technology are not yet using them. In the case of larger retailers, a portion of the delay may be related to upgrading the software associated with using the chip readers. However, smaller businesses can use the plug-in terminals without concern. This means that your business may be able to start accepting them soon if it has not already done so.

Online Transactions Are Not Protected

If you have a retail location and an e-commerce website, you may be wondering how a chipped card benefits your business or your customers with online transactions. The unfortunate reality is that EMV technology is not protective against online credit card fraud cases. In fact, some experts believe that criminals who previously used in-store techniques to commit credit card fraud will transition to online efforts as EMV technology becomes more commonplace. With this in mind, it may be possible for online fraud cases to increase in the near future. EMV technology is most successful at preventing card counterfeiting activities and other related activities involving the actual credit card.

Credit card fraud is a serious issue that can affect consumers, retailers or businesses and credit card companies in significant ways. EMV technology can decrease some types of fraud, but it is not effective at preventing all types of fraud. Furthermore, the credit card terminals can be rather costly to upgrade, but smaller businesses that may have less ability to absorb the cost than larger businesses may be able to avoid the software upgrade and get a plug-in terminal. In the event that upgrading your terminals is not ideal right now, you can take your chances with the potential liability risk you face because of credit card fraud incidents.