Accept Credit Cards? Learn How EMV will Impact your Business.

EMV smart cardsEMV is a credit card technology upgrade that helps to prevent fraudulent transactions. Commonly known as Smart Cards, they reduce the risk of credit card fraud for consumers and businesses.

While that’s good news for both credit card holders and credit card issuers, it brings some new risks for businesses that accept credit cards.

For business owners, this means it will take time and money to address.

What is EMV?

Credit cards enabled with EMV chips are a form of “smart cards.

EMV chips are embedded in your credit card and replace the magnetic strip. The EMV chip is actually a mini-microprocessor and significantly improves the security of your card data.

EMV chip enabled credit cards will make the magnetic strip on your credit & debit cards go the way of the rotary phone.

EMV’s Impact on Small Businesses

Credit card issuers in the U.S. are now issuing cards with EMV technology to replace the ones we all currently carry.

As a business owner who accepts credit and/or debit cards, you’ll need stay up to date on this technology transition because it will affect your processing systems.

Magnetic strip card readers cannot communicate with EMV chips. So you’ll need to upgrade to EMV enabled card readers. On a practical level, you’ll need to be able to process both types of cards until magnetic strips are historical artifacts.

Potential for Transfer of Liability

Don’t put the equipment upgrade off for too long though as it may leave your business at risk. In addition to dealing with the technology upgrade, be sure to keep an eye on the small print in your merchant services account agreements.

Some card issuers are considering transferring the liability for fraudulent transactions to the business owner if a customer uses a chip enabled card and the business does not have the capacity to read it. That’s because the security features are only effective if all parties to the transaction are able to access the EMV chip.

This would be a major change to a business’ potential financial liability for fraudulent card use.

We’ll have more information for you on this subject in the coming weeks, including best practices for analyzing and implementing the changeover.