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How Does The EMV Liability Shift Affect My Business?

This October, the EMV liability shift will virtually eliminate fraud by generating a one time code for transactions that take place with a chipped credit or debit card within a store. The code changes with each transaction, rather than the traditional magnetic striped cards with unchanging information, which makes it nearly impossible to steal information.

After October 1, 2015, the liability for card-present fraud will shift to whichever party is the least EMV-compliant in a fraudulent transaction. While the EMV liability shift date will bring peace of mind to consumers, financial institutions, and merchants, it will also come with some expense and adaptation to those updating their technology to make the switch.

For merchants and financial institutions, (many of which have already done so) the update to EMV means adding new in-store credit card chip technology and internal processing systems, and complying with new liability rules.

If you offer an in-store, card present transaction, you will need to make the following changes to be compliant with the EMV liability shift rules:

  • Purchase a new card reader. You’ll need an updated card reader to read consumers’ chipped cards. Rather than the traditional swiping method of a magnetic card, the new device will require customers to “dip” their card in order for the chip technology to be activated. A new card reader will cost your business a few hundred dollars, depending on which device you purchase.
  • Update your processing system. You may or may not need to update your POS system, depending on the card reader you purchase. Check with the company you purchase your card reader from to see if your processing system needs updated as well.
  • Train employees to use and troubleshoot the new technology. There are two transaction types employees need to know about with the EMV technology. The most common method will be with contact cards where the chipped card is inserted into the reader, and the consumer either enters a pin or provides their signature to authorize the transaction. There is also a “contactless” EMV, where consumers use their phone or mobile wallet to pay, such as ApplePay.
  • Familiarize yourself with the new liability rules. After October 1, 2015, if a customer uses their chipped card in your store and their information is stolen, your business will be liable. Click here for a detailed explanation of the new liability rules from the US Treasury.

If your business accepts card-not-present payments, such as payments made online or by phone, the credit card chip technology does nothing to heighten security in those instances. If you accept only online payments, you do not need to do anything to prepare for the upcoming EMV liability shift and it will not affect you at this time.

Keep in mind that with a significant reduction of in-store credit card fraud (France claims an 80% deduction), it is likely that fraudsters will get more creative. Online payment information may become more compromised as it will be easier to access than financial information on in-store purchases with the chip technology. Do all that you can now to protect customers’ payment information submitted to your business online.

While the EMV liability shift date may bring a bit of stress and expense to your business now, it will protect your business and your small business bookkeeping in the long run. If you simply update your systems to be compliant with the new standards, you will not be liable for any fraud that may happen in your store.


Read more about the EMV liability shift:

What is Credit Card Chip Technology and the EMV Liability Shift?

What do I Need to do to Prepare my Business for the EMV Liability Shift Date?

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