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Is Your Small Business Ready for the Upcoming Credit Card Processing Changes?
This fall, new credit card processing system rules are coming into effect that could have a large impact on small business owners who accept point-of-sale credit card payments from their customers.
According to a recent Gallup poll. only 49% of small business owners who accept such payments are aware of the upcoming changes in credit card fraud liability laws that major credit card companies are implementing on October 1, 2015. The same poll shows that only 29% of those who don’t currently have chip-enabled credit card processing systems plan on upgrading their payment processing technology in order to comply with the new rules.
If you’re a small business owner who accepts POS credit card payments right now, using a traditional credit card terminal. then these new rules could have a major effect on your business. While upgrading to the new EMV system isn’t mandatory, and the costs of upgrading equipment may be high, small business owners need to be aware that the costs of non-compliance could potentially be much higher.
How high? Under the new rules, businesses which are not using EMV-compliant payment processing systems may find themselves liable for any fraud or security breaches which may occur as a result.
What Is An EMV Card?
EMV. which stands for Europay. MasterCard and Visa. is a global credit card payment standard that is currently being used by over 80 countries around the world. including Canada and countries in Europe, South America and Asia. The EMV chip card utilizes chip technology which, when used with an EMV terminal. makes it far more difficult for criminals to steal information leading to credit card fraud.
The traditional magnetic strip found on non-chip credit cards contains the user’s financial information necessary to complete financial transactions, all in a static data format. In the past few years you’ve probably heard of a number of security breaches that have taken place among large, well-known retailers; these security breaches enabled hackers to download the information contained in the magnetic strips of consumers’ credit cards and duplicate them in counterfeit cards which were then used in fraudulent transactions.
Unlike a magnetic strip card, however, EMV cards don’t contain static data. Instead, every time you use an EMV chip card to make a purchase at an EMV-compliant card reader, a unique transaction code is generated which can only be used once. In the event of a security breach, the data obtained from chip-enabled transactions therefore can’t be used to create duplicate credit cards to be used for fraudulent purposes.
Cost to Upgrade to EMV Credit Card Processing System
There is definitely a cost involved in upgrading credit card processing systems. However, the actual amount of the upgrade will vary considerably depending on a number of factors. For example, a business with a
simple, single POS terminal will probably incur lower upgrade costs than a business using an integrated or more complicated system. In some cases, a certification may be required to prove the EMV system is correctly installed.
Additionally, there are also a number of different options among EMV-compliant systems themselves. You could, for example, choose to upgrade to devices that will accommodate chip-and-signature cards only—that is, cards that will still require the customer to provide a signature—or you may decide on a payment system that will enable customers with chip-and-PIN cards to enter a PIN to authorize the transaction.
If you’re considering an upgrade, speak with your credit card processing services provider to see what options will work best for you. Credit card processing companies are well aware of the upcoming shift in credit card fraud liability rules and should be able to help you to properly assess your particular upgrade requirements. When it comes to EMV migration. it’s important to do your research thoroughly and investigate all the options available to your business.
In assessing the cost of upgrading your payment processing equipment, you may also want to consider factors other than direct costs, such as the likelihood of fraud. For example, if you run a business that’s in the high fraud risk category—such as businesses that sell goods with a high resale value, like jewelry or other luxury goods—you are likely more vulnerable to fraud. Switching to an EMV-enabled system may ultimately lower your costs in the long run.
And if you were already thinking about upgrading to accommodate mobile payments? It might make sense to upgrade to accommodate both at the same time.
Another cost which needs to be taken into account is the cost of training your employees to use the new EMV systems, as there are some differences between using a traditional magnetic stripe card reader and the new EMV-enabled chip readers.
Unlike transactions using cards with a magnetic stripe, employees will need to enter the amount of the purchase first, before the card is inserted into the payment terminal. Additionally, the card must remain inside the terminal for the entire length of the transaction; if a consumer removes his or her card before the transaction has finished, the transaction won’t be completed and the payment process will have to start all over again.
And because consumers will initially not be used to keeping their cards inserted into the payment terminal for the length of the transaction, employees will also need to watch out for consumers who forget to remove their cards once the transaction has been completed.
While upgrading your credit card payment processing to meet EMV standards isn’t mandatory, it’s probably an investment your business will have to undertake sooner or later, and one that could ultimately be quite beneficial for your business’s bottom line.
Written by Belle Wong
August 26th, 2015 at 12:57 pm