Credit Shout may collect a share of sales or other compensation from the links on this page.
Q: I am a small business owner. When do I need to be able to accept EMV enabled cards? And what happens if I am not ready on time?
There is currently a deadline of October 1, 2015, for businesses to be able to accept cards with EMV microchips (otherwise known as Europay, MasterCard and Visa, or chip card, technology).
This deadline is considered a soft deadline for merchants for two reasons.
First, not all consumers will have received and activated replacement or new credit cards equipped with an EMV chip. So you must still be able to accept magnetic strip debit and credit cards.
Second, your business may not yet have purchased new terminals capable of processing EMV cards. In that case, you will still be able to process all cards, as current EMV enabled cards will still contain magnetic strips. However, changes in credit card liability law may leave your business liable for any fraud that occurs.
While your business is not legally required to upgrade its systems by the deadline, it is certainly important if you want to reduce your risk of liability.
Reports indicated that small businesses have been slow to bear the cost of updating their credit card terminals and point of sale systems to accept EMV chip cards. It is currently estimated that more than 40% of retailers (mostly small business owners) will miss the October 1st deadline.
Part of the reason for the slow uptake of the new terminals is their cost, which is estimated to be between $150 and $600 per unit. (More expensive machines are capable of accepting Apple Pay and other smartphone based payment methods.)
To learn more about EMV secure cards, please read this article.
We received a couple of questions from business owners after posting this article. So we did a little more digging, and thought you might find this information interesting:
- About 10% of US small business were victims of some sort of payment fraud. The introduction of EMV cards will help reduce this issue (but not entirely eliminate it).
- Many small business owners are not switching because they never are hit with chargebacks. This is a mistake. After October 1st, banks will no longer take the hit if you only accept magnetic strips. Your business will.
- The switch will not solve all fraud. The United Kingdom made the switch in 2005. And chip-enabled cards lead to a decline in losses due to counterfeit cards at the retail level of over 50%. But online fraud increased 64% between 2005 and 2013.
- Card issuers, banks, and payment processors are now working on a system to combat online payment fraud.
Last Updated: September 2, 2015