October 1st, the much-anticipated deadline for the EMV liability shift, has come and gone. Now, the liability exists with the least EMV compliant party involved. Let’s break down what this means…
If a business is using technology that is not EMV-compatible and their customer has an EMV enabled card, they are liable for any fraud that results from that transaction.
However, if a business has an EMV-enabled card reader but the bank hasn’t issued the customer an EMV enabled card the bank is liable for fraud.
If a business uses an EMV enabled card reader on a customer’s EMV-enabled card, then the liability is held by the credit card company.
Now let’s break talk about what retailers should know, and what they should be doing…
Businesses should be aware that since the October 1 deadline has passed, they are now held liable for any fraud on a chip-enabled card. This, of course, is only if they haven’t invested in the new EMV technology.
An article from Restaurant Business Online says that most businesses haven’t implemented the new EMV technology yet – stating that some studies have put the level of adoption at as low as 24 percent. This number means a large majority of businesses are at risk if fraud happens to take place.
Though the majority of businesses haven’t equipped their stores with EMV-ready technology, major retailers like Walmart, Target and Costco have. An article from The Street says that Target and Home Depot have invested “tens of millions” of dollars to protect themselves.
The Austin Business Journal says, “the top hurdles preventing businesses from becoming EMV compliant include processor readiness, gateway readiness and the need to replace point of sale (POS) terminals.”
The U.S. is adopting EMV due to one main reason – it is way safer. The chip card security is proven to produce less credit card fraud, as the U.S. is one of the last majorly developed countries to implement the technology.
This is because it’s easier for criminals to gather information from the magnetic stripe compared to the EMV chip. Credit card companies have or will be sending new credit cards to their consumers with the chip, or else they will be the party held liable if fraud occurs.
The Austin Business Journal also stated, “According to an article published in PaymentsSource in 2015, U.S. fraudulent liabilities will exceed $10 billion this year. Fraud is rampant. The cost of not transitioning to EMV technology could be financially devastating to a business owner.”
Businesses may be procrastinating the transition, but doing so might be financially irresponsible in the long-run.
Retailers can expect to see their point-of-sale methods to change in more ways than one.
EMV technology will more than likely make paying via mobile phone more popular, according to an article from Mobile Payments Today. The article states “almost every single mobile point-of-sale provider has deployed new hardware that not only accepts chip
Another reason the EMV liability shift could lead to an increase in mobile payments is the time associated with EMV card readers. An article from Restaurant Business Online states, “Today’s mag-stripe
Those in a hurry might realize that mobile payment will be their best bet to move quickly. Especially since today’s consumers are used to fast service, they might see the time involved wicredit cardnconvenient.
EMV is here, but it will take time before retailers fully adopt the new technology. Meanwhile, they are taking a risk by not being compliant with EMV. Prolonging the process could be costly in the long run. Retailers should be aware they are at risk if they haven’t implemented the technology, chips cards are significant more secure than swipe cards and to expect a rise in mobile payments over the course of time.