If your business accepts credit and debit cards at the point of sale, change is coming.
How your customers pay has also been changing, with new types of cards and payment forms.
You need to be ready with new technology to accept those payments — and protect your business in the process.
How Payment Forms Are Changing
In the past, cards would be swiped through your card terminal.
Moving forward, customers will be using EMV (Europay, MasterCard, Visa) enabled chip cards to pay.
Chip cards look like a regular plastic payment card, except they have a microchip embedded in them that greatly reduces the chances of the card being counterfeited. In other words, with chip cards, there’s less likelihood of counterfeit card fraud.
Instead of swiping a chip card, the customer inserts the chip card into the point-of-sale terminal for the entire duration of the transaction.
Other forms of payment are increasingly being used by customers, as well.
There are contactless cards, so instead of swiping or inserting the payment card into a chip card reader, the customer simply taps or waves that type of card in close proximity of the contactless reader. The transaction data is securely transferred wirelessly, making a fast and smooth transaction.
Mobile wallets, such as Apple Pay, are also growing in popularity. Customers pay by placing their smartphones next to a contactless reader to complete the transaction.
Why is This Change Important to My Business?
This October 1st marks an important date for small businesses that accept credit and debit cards at the point of sale.
On October 1, 2015, the Payment Brands such as Visa, MC, Discover and American Express will be implementing a “liability shift.” That means the party (issuer, acquirer or merchant) that did the least to prevent card-present fraud from a technology standpoint will now bear the responsibility for certain types of fraud, such as counterfeit and possibly lost/stolen fraud.
What can you do to avoid being the liable party once this liability shift takes place?
One solution is to have payment technology in place that accepts these new forms of customer payment, especially the chip cards.
Implementing new payment readers for chip technology will help protect your business against liability for counterfeit and potentially lost/stolen fraud after October 1st.
EMV chip technology adds security to ‘card-present’ transactions, meaning the cardholder is there in person presenting the card for payment.
According to Deanna Karhuniemi, EMV product manager for Chase Commerce Solutions, “What the new chip technology is solving is that it mitigates the instance of counterfeit card fraud.”
For the fraud mitigation to be effective, both the card issuer and the business must have EMV technology in place.
“EMV is a security technology that effectively makes each ‘card present’ transaction unique. EMV security technology makes that transaction data useless to anyone trying to copy that transaction data or intercept it somehow and try to use it to create a counterfeit card,” explained Karhuniemi.
A National Initiative
Remember, the switch to EMV technology is an industry-wide change. In fact, it’s become a national initiative.
To increase awareness and accelerate the move to EMV chip-based credit cards, last fall President Obama launched the BuySecure initiative.
At the time he pointed out that, “identity theft is now America’s fastest growing crime.” More than 100 million Americans, he said, have had information compromised.
Chip technology, he noted, is more secure and replaces magnetic strip technology, which actually is very old, dating back to the 1970s.
Much of the rest of the advanced world has already adopted EMV technology. When Great Britain switched to chip cards, fraud at stores decreased by 70 percent, President Obama pointed out.
Where to Turn for Answers
If you’ve been putting off the transition to the new payment card readers, the following tips can help you sort through the issues and take next steps.
As a card issuer and an acquirer, Chase is in a unique position to educate businesses to help get prepared to accept chip cards at the register.
At the same time the company is actively working to implement new technologies to address other forms of fraud. Chase provides a point-of-sale terminal called Future Proof that allows merchants to accept current and quickly emerging forms of customer payment all in one streamlined device.
The terminal helps merchants prepare for the future by accepting chip cards, as well as mobile Near Field Communication (NFC) and other forms of contactless payment. (This ends up benefiting your customers, too!)
Through these improvements, Chase maintains a commitment to security, convenience and the current value of traditional credit card acceptance.
Tips for Adopting EMV Chip Technology
Finally, whether you use Chase solutions or not, follow these tips to make the transition to accepting EMV chip cards as smooth as possible:
- Timing is everything. Adopt EMV too soon and you could face additional costs as PIN debit networks add EMV standards. Adopting it too late however, could cause you to face liability shift expenses. Remember that October 1st date.
- Don’t forget the add-ons. When you add EMV, don’t forget to consider upgrades such as encryption, tokenization and contactless payments. These add-ons will provide an extra layer of security and convenience for your customers.
- Be vigilant. Be prepared for fraud increases in card-not-present channels such as payments by mail, fax, phone or over the Internet. EMV adoption has historically shifted card-present fraud to card-not-present and cross-border fraud.
“EMV is one-third of the overall security solution to protect against fraud,” Karhuniemi shared. It protects in card-present situations.
By thinking ahead and choosing payment technology wisely, you can also protect against other types of fraud.
“Businesses should approach payment card security holistically,” added Karhuniemi. “Business owners should look for payment technology that also addresses point-to-point encryption and tokenization, which protects card data you may have to retain such as for recurring payments.”
EMV, encryption and tokenization protection in the payment environment will provide the widest protections against fraud.
And remember, there are marketing opportunities with new payment terminals, also.
When you are able to accept the new forms of payment that your customers are using, you make transactions faster and easier. That leads to great customer satisfaction.
This video also has a good explanation of the landscape involving new payment readers:
Don’t put off the transition too long. With the liability shift occurring October 1st, why take the risk?
To learn more about how to install EMV technology and protect your business, visit the Chase Chip information page or visit them on Twitter at @ChaseSmallBiz.
Image: Chase
Less chance for fraud? That’s great. In the past, I always thought that money is the only way to stay in the safe zone when it comes to receiving payments. But what I learned is that you cannot be 100% safe. There is always that risk. It may be safe at the beginning until people figure out a way to get around it yet again.