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The EMV Fraud Liability Shift is Coming: 10 Things Small Businesses Need to Know Before October 2015

As part of the U.S. shift to EMV technology (also known as chip and pin technology), the liability for credit card fraud will also be changing. Here are 10 things small businesses need to know to help limit fraud liability.

Businesses that accept credit card payments must prepare for a big change coming this October. As part of the U.S. shift to EMV technology (also known as chip and pin technology), the liability for credit card fraud will also be changing. While in the past credit card issuers have assumed the entire liability for fraudulent transactions, this will no longer be the case. After October 1, an EMV liability shift will begin, and businesses will assume fraud losses in cases where a chip card is presented as payment, but processed with older swipe card technology.

Here are 10 things small businesses need to know to help limit fraud liability.

  1. An upgraded payment terminal is required. New, advanced payment technology is available now and should be implemented by the October 1 deadline. Older, swipe-only terminals must be upgraded to those capable of accepting a chip card. During the transition, EMV enabled terminals can accept magnetic stripe cards as well.
  2. The credit card will stay with the customer during the entire transaction. In the past, some payments, including those in restaurants, have typically been processed by taking the credit card from the customer to a remote terminal. Going forward, the upgraded terminals should be brought to the table, allowing the chip card to remain with its owner.
  3. Businesses should clearly understand how to use the new technology. Those on the front lines of payment acceptance need to gain familiarity with the new procedures required for chip cards.
  4. It takes a few seconds longer to process a payment. For businesses accustomed to handling longer customer lines during peak shopping periods, a slight rethinking of the transaction process from start to finish may help improve efficiency.
  5. Remember, this is new to consumers as well. Some customers may not even realize that their credit card carries the new technology. Be prepared to guide first-time purchasers through the process.
  6. Understand which payment transactions leave businesses open to losses stemming from the EMV fraud liability shift. Recognizing the responsibility to process transactions correctly is key to preventing fraud losses. Employees should be educated on the new procedures.
  7. The chip card technology isn't new—in fact it's currently in use around the globe. The United States is actually a late adopter of EMV technology. Chip cards have been in used in many other countries for years and fraud losses have decreased as a result.
  8. Gas stations have an extra two years to comply with the new technology. "Pay at the Pump" terminals have been given until October 2017 to roll out chip card acceptance.
  9. No extra penalties or fees will be assessed for fraudulent transactions. The EMV liability shift limits losses to the amount of the transaction that was charged. For example, a $50 haircut would result in a $50 loss if charged with a counterfeit card.
  10. Customers won't always need to enter a PIN, and they won't always need to provide a signature. Individual validation of transactions and cardholders will be determined by the credit card issuer.

With the proper equipment and training, the transition to chip and pin cards should be relatively painless for small businesses. As credit card issuers, payment processors, consumers, and businesses work together to limit fraud, the benefits of the new technology observed in other countries should also help to limit fraud in the United States.


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