Is Your Business Prepared For The End of the Swipe-and-Sign Credit Card?

Beginning later this year you (and your customers) will stop swiping credit cards. Here's what you need to know.

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Beginning later this year you (and your customers) will stop swiping credit cards. “Instead, you will insert your card into a slot, just like people do in much of the rest of the world, where the machine will read a microchip, not a magnetic stripe.” (Source: The Wall Street Journal)

U.S. banks are on the verge of adding EMV technology, which stands for Europay, MasterCard, and Visa. Soon, credit cards will be equipped with a small computer chip that is nearly impossible to counterfeit. The U.S. is the last major market that still uses the outdated swipe-and-sign system. This is an easily overlooked, but significant change to the payments landscape.

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“Approximately 120 million Americans have already received an EMV chip card and that number is projected to reach nearly 600 million by the end of 2015, according to Smart Card Alliance estimates.” Source: CreditCards.com

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Currently, business owners are expected to make the switch to EMV-enabled devices by October 1, 2015. Today, if an in-store transaction is conducted using a stolen or counterfeit card, consumer losses usually fall on the payment processor or issuing bank. After the October deadline, if your business hasn’t invested in EMV-enabled terminals, the cost of fraud will be on you.

 

EMV Compliance For Small Business

EMV compliance is an increasingly important issue, if not a little complicated. Here are the most important facts you need to know to get going.

 

Who will be affected by the switch to EMV?

Businesses of every size! As a business owner, you’ll need to decide whether or not to invest in EMV-enabled terminals. Doing so, however, future-proofs your company from fraud, loss, and liability charges, and protects your greatest asset: your customers.

Consumers will be affected, but to a much lesser degree. Mostly, they’ll benefit from the newfound security of EMV cards. Right now, 37% of all US credit card fraud is a result of counterfeiting, according to the Aite Group.

When fraudsters obtain stolen credit card numbers from retailers—as was the case with Target and Hope Depot—they can produce fake magnetic-stripe cards easily, using equipment found online. As EMV spreads, this will become increasingly difficult. Every time an EMV card is used, the chip creates a unique one-time code not usable again. Consumers will benefit from this advanced security.

 

What can small businesses do now to prepare?

Talk to your merchant services provider and discuss what a transition to EMV-enabled devices would look like. Then contact your third-party point-of-sale software provider to understand its strategy for becoming EMV compliant. Ask questions like, “When will it be ready for EMV-enabled payments?” and “What practices can we put into place to reduce the risk of data theft and fraud?”

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