EMV and Payment Liability for Small Business

Unfortunately, payment card financial fraud is becoming an all too common occurrence for small business owners.  That’s why you may be hearing the terms like EuroPay, Mastercard, and Visa (EMV) as well as payment card liability shift more often.

First of all, what is EMV?

EMV stands for Europay, MasterCard and Visa, a global standard for inter-operation of integrated circuit cards (IC cards or “chip cards”) and IC card capable point of sale (POS) terminals and automated teller machines (ATMs), for authenticating credit and debit card transactions.

So what’s the big fuss for small business owners when it comes to EMV?  Two words stand out: Security and liability

According the paymentslender.com, the annual costs of card fraud in the U.S. alone are estimated at $8.6 billion per year. Experts believe that figure will rise to $10 billion or higher by 2015.

While those numbers are staggering, in the past the liability for counterfeit payment transactions fell to the card companies.  That gave some relief to small business owners who have limited resources and mitigation tools.

This “liability relief” is slowly coming to an end at the end of 2015. 

MasterCard defines the liability shift this way: The party, either the issuer or merchant, who does not support EMV, assumes liability for counterfeit card transactions.

What does the change in liability shift mean you. the small business owner?  

First, if you are not yet EMV compliant, don’t think the sky is falling.  You may have already received calls and letters telling to act today or you are doomed.  That’s simply not true.

However, you need to start a plan of action to ensure that you become EMV compliant and protect your business.

Although the new terminals that are EMV compatible are already being deployed, they aren’t mandatory.  It’s not until October 1st, 2015 that a liability shift occurs.  After that date, if a counterfeit card is used at a non EMV terminal, then the merchant will incur the full penalty for the losses on that transaction.  Even after that date, the existing terminals will continue to function, however some merchants may be incurring more risk than necessary.

The Bottom Line with EMV and Small Business

What should you, the small business owner, do now? 

If you are 100% you are EMV ready and have taken necessary steps to protect your business, congratulations, you are being proactive.

However, if you are still uncertain and are like many small business owners in the U.S. when it comes to EMV compliance, you need to talk to a payment professional to understand your risks and options moving forward.

Robert McBeath is a Certified Payment Professional and President of Cornerstone Business Solutions and the COO of BizzGrizz.  Robert has extensive experience offering merchant services and cash advances to business owners. He can be reached at 888.979.4731 x802 or by email Robert@cornerstonecard.com.

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