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october liability shift

The October EMV Liability Shift is Here!

Ray Moorman

By now every merchant has likely heard about the October 1, 2015 EMV chargeback liability shift, although you might not be totally clear about what this date really means. If your business is not EMV-ready yet, don’t panic. You will still be able to process transactions as usual. But you should be aware that your liability for certain types of in-store fraud has changed.

What is EMV?
EMV (EuroPay, MasterCard and Visa) a global standard for data protection for payment cards. Already widely used in Europe and Canada, EMV cards feature an embedded microchip that offers additional safeguards against card present fraud. By creating a unique code with every transaction, EMV technology makes it harder for criminals to intercept data, and nearly impossible to for them to create duplicate or counterfeit cards.

The United States is the last major economy to make the transition to EMV. Though experts predict it will take years for all U.S. merchants to fully comply, EMV stands to drastically reduce certain types of fraud. The importance of implementing EMV is driven by the fact that the U.S. has more incidents of fraud than other major global economies where EMV has been in use for many years—and that number is increasing.

Common myths about EMV
Many misconceptions exist about EMV technology and the role it plays in protecting customer data. Here are just a few myths about how EMV works and what the October deadline means for merchants.

Myth: If you wait to implement EMV, you will be considered non-compliant with the card brand networks.
Fact: There is no mandate to implement EMV. There is however a liability shift for certain fraud related chargebacks. So merchants not processing chip cards with EMV-enabled terminals may see an increase in chargebacks and associated fees. 

Myth: Your payment processing system will stop working if you haven’t started using EMV by October 1, 2015.
Fact: Your POS will continue to work as before, although eventually credit card vendors may require you to switch to EMV if you wish to continue doing business with them.

Myth: You will pay more fees if you accept payment cards without an embedded chip.
Fact: Interchange fees are the same, with or without a chip-and-pin card.

Myth: EMV cards will prevent all fraud.
Fact: EMV is only one important component of a broader security solution. There is no cure-all solution that will stop all cyber attacks, though by implementing several layers of protection you can help reduce your overall fraud risk and liability.

How EMV technology helps merchants
Converting your POS system will allow you to accept and protect foreign payment cards that have embedded chips. Broaden your customer base and increase sales by accepting payments from a wider variety of card types. By staying on top of emerging technologies like EMV, your payment systems—and your business—will be ready for the future.

How to upgrade your system to EMV
Implementing EMV requires a number of changes to your POS system. You may need to purchase new hardware—such as new terminals with contactless readers—along with new software. Plan to spend some time understanding how your new system processes transactions and associated data. Your payment processor or POS vendor can walk you through all stages of implementation, and provide you with resources to help you minimize your time and expense moving forward. The long-term reward of enhanced protection for your customers vastly outweighs the short-term pain and expense of upgrading.

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