Does the date October 1, 2015 mean anything to you? On that day, something big happened for small business owners and financial institutions alike. Legislation authorizing the use of EMV chip cards and readers went into effect. Widely implemented globally, the U.S. was a bit of a laggard when it came to implementing EMV chip card legislation. Like most business owners, you probably heard that these new “smart cards” would help reduce fraud. And, you may also have heard that your business would be liable for fraudulent transactions if you did not have the new chip-enabled card readers to accept them.
With so much commentary swirling around out there, we thought it might be helpful to condense all of the EMV chip card chatter into a few key points every small business owner needs to know. Plus, it’s also a way that we can let you know that we will be rolling out the Union Savings Bank Debit chip card mid-June.
What’s an EMV chip card and how does it work?
Banks and other financial service companies are replacing traditional debit and credit cards with a “smarter” card; one with a microprocessor embedded in its face. Known as EMV cards (short for Europay, MasterCard and Visa), they have been used in Europe for years and have cut down on credit card fraud significantly. Now they’re in the U.S., which is good because about 50% of all global credit card fraud takes place here.
In order to accommodate these new cards and get the full security benefit that they provide, you’ll need to upgrade your business’ payment terminals to new, chip-enabled devices. These can be obtained from your merchant services provider.
When an EMV chip card is inserted into an EMV compatible card reader, the embedded chip creates a unique code every time it’s used. Your customer will then be prompted to either enter their PIN code or sign their name. This protects against card counterfeiting and other point-of-sale fraud because a duplicated card is useless without the embedded chip. Smaller dollar amount transactions may only require that the customer insert the EMV card into the reader.
Do I need to get an EMV chip-enabled card reader?
To read the more secure chip card, yes, you need an EMV chip card reader. However, EMV cards have a magnetic strip on the back and can be swiped through a traditional card reader. So technically, you don’t need a chip-enabled reader in order to accept credit and debit cards and there is no requirement that you must get one. However, there are a number of reasons why it’s in your business’ best interest to convert to the new technology:
•Shift in liability. As of October 1, 2015, if an EMV chip card is swiped fraudulently through a traditional card reader or if the card reader is not enabled to process the chip card, you, the merchant, are liable for any loss. That’s a big change and it’s a huge potential financial risk for your business.
•Security. Converting your terminal is a really great way for you to fight fraudsters who bilk millions, if not billions, of dollars from U.S. consumers and businesses annually. Converting will not only benefit you, it will benefit your customer, and make the entire retail industry more secure and profitable. At the end of the day, everybody wins—except the fraudsters.
•Increased customer confidence. Your customers are well aware of credit and debit card fraud. All of them have been bombarded with media reports of fraud, and many have been victims at one time or another. When they see you’ve upgraded to the new card technology, they’ll know you care about their security, and they’ll be able to do business with you confidently.
Do transactions take longer?
They may take a little longer to process at first, but if you learn the system yourself and take the time to train your employees so that they are confident in explaining how it works to the customer, you’ll be able to make the transition smoother for everyone.
And, you won’t be alone. If you bank with us, your Union Savings Bank Merchant Services Representative will be able to walk you and your employees through the entire conversion process. In no time, you’ll be the expert who can coach your customers in the use of their new cards.
Once I switch to the new terminal, what happens if a customer wants to pay with a non-EMV chip card?
The new terminals can accept magnetic strip “swipe” transactions, so you’ll be able to accept traditional cards just as you always have. Additionally, while there are still many traditional cards in use, financial institutions and credit card companies are actively converting their cards to the EMV chip (for example, Union Savings Bank credit cards are already chip-enabled, and new debit cards will be available in mid-June.). Converting your terminal now means you’ll be ahead of the curve. As more cards are converted, you and your employees will be able to expertly assist your customers, making their chip card transaction a smooth experience.
What is my liability if I accept a traditional card with the new terminal?
As long as you are using an EMV chip-enabled card reader, the liability remains with the issuing financial institution. So, while it may cost a little up front to convert, you’ll save yourself from potential fraud and the loss associated with it. Over time, that savings will add up; not to mention the peace of mind that comes from knowing you are providing the safest, most secure payment method for your customers and your business.
Small business owners face many challenges every day; worrying about fraud and the risks it poses to your customers and your business shouldn’t be one of them.
Written by Melissa R. MacCaull
Director of Marketing, Union Savings Bank