Small Businesses Aren’t Prepared for EMV Chip Regulations, Surveys Find

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Is EMV (chip) credit card technology actually going to pay off in the long run? It depends on who you ask.

For U.S. banks, EMV chips will hopefully reduce some of the millions of dollars paid out each year when fraudulent charges are made on credit cards. The magnetic strips on traditional cards, which hold the individual’s personal information and which allow money to be transferred when the card is swiped at the register, are actually very vulnerable to thieves.

For consumers, the change from magnetic-strip cards to EMV ones means nothing more than getting a new card in the mail.
For consumers, the change from magnetic-strip cards to EMV ones means nothing more than getting a new card in the mail.

For consumers, the change from magnetic-strip cards to EMV ones means nothing more than getting a new card in the mail. The replacement cards are being sent out at no extra cost to consumers, along with the promise that EMV technology will lower the risk of fraudulent charges and identity theft. It seems like a pretty good deal.

But for businesses — small and independently-owned businesses, in particular — the new regulations are mostly confusing and costly.

USA Today has reported that about 50% of all credit and debit cards in the U.S. will have been replaced with chip-enhanced cards by the end of 2015, and “tens of millions” of businesses will have to upgrade their payment processing systems to comply.

Beginning on October 1, 2015, NerdWallet states that all U.S. businesses will be required to accept EMV chip cards; if they refuse to upgrade their systems in order to accept the new cards, they’ll be held responsible for paying back a fraudulent charge (instead of placing that responsibility entirely on banks).

The problem? Not every business has the technology, many small businesses lack the time and/or money to install upgrades, and a significant portion of businesses in the U.S. aren’t even aware of the EMV regulations and the liability clauses that will be implemented this fall. Standard operating procedures can be of great use here!

According to the latest surveys, 64% of businesses are aware of EMV chip cards, and 42% have already committed to accepting the cards by upgrading their systems. However, only 19% of all small businesses in the U.S. are aware of the liability change.

Currently, the POS systems that many businesses use cost thousands of dollars, meaning that a system upgrade could cost almost as much.

However, if a business already uses small mobile payment systems, it can find EMV reader upgrades for as little as $30. These system upgrades likely aren’t sufficient for businesses with complex POS systems, but considering that mobile payments are expected to increase from $52 billion to $140 billion by 2019, many small businesses have already begun implementing mobile payment processing systems.

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