By Rieva Lesonsky
Your small business could be at risk from a threat you may not even know about: the coming conversion to chip-and-pin technology, or EMV cards. If you haven’t heard about the EMV card deadline—fast approaching on October 1, 2015—you’re not alone. Here’s what you need to know.
In an effort to stem credit card fraud, U.S. banks are switching payment cards over to chip technology. Also known as “EMV” (Europay, MasterCard and Visa) cards, the new cards include a chip instead of a magnetic strip, and will be sent to all U.S. consumers by October 1. As of that date, businesses that don’t have chip reading technology will be liable for any fraud related to payment card use.
If your small business accepts credit and debit cards—and I hope you do!—it’s up to you to install new card reader technology to accept EMV cards by the EMV card deadline. The move is an effort by banks and payment card processing companies to shift the burden to businesses. Although only those businesses that don’t comply will be affected, that’s a significant chunk of business owners. A recent survey by small business community Manta found that of small business owners who are reluctant to adopt chip technology, 28 percent say it’s because they don’t know what EMV technology is, 16 percent say they haven’t yet seen enough chip-enabled cards in use to make it worth their while, and 12 percent say they disagree on principle with the liability shift.
If you aren’t familiar with EMV technology and the requirements, now is the time to learn. You may not be seeing a lot of chip-enabled cards yet, but after October 1, you will. And just one incident of fraud involving one of those cards could leave your business responsible for paying more than the cost of upgrading your technology.
Here’s what you need to do to be prepared. First, contact your current point-of-sale provider/payment processing company. Find out if the POS you already have is compatible with EMV technology. (If it’s a newer model, it might be and you will just have to turn that feature on.)
Your POS provider can tell you whether or not you need to upgrade or invest in a new payment processing system. That investment is likely to be a lot less than you think. Square is offering its customers a free EMV reader while supplies last; Intuit is offering an EMV reader for $30. Really, not upgrading your technology by the EMV card deadline is not only risky, it’s downright silly if a few dollars can protect you from fraud liability.
EMV cards will require some getting used to. Instead of swiping a card and signing or inputting a PIN, customers will insert the card into a terminal where it remains until the transaction is over. There will be a small learning curve—one that some experts believe will prompt more consumers to try mobile wallet payment options such as Apple Pay.
That makes now a good time to upgrade to a more comprehensive payment processing solution—one that can accept payment via NFC (near field communications) such as Apple Pay. As younger, mobile-savvy consumers grow older, and as older consumers become comfortable with new technology, mobile payments are only going to become more popular.
If you do upgrade your POS to handle EMV, make sure your inventory, loyalty or other sales-related software works with the new POS system.
Some 40 percent of the Manta survey respondents who aren’t planning to upgrade their POS say it’s because they don’t accept credit card payments at all. If this is you, you really need to make some changes. The more methods of payment you can accept from your customers, the more payments you’ll get and the more money you’ll make.