For owners and executives utilizing a merchant cash advance to upgrade their point-of-sale systems to allow for EMV chip cards, the long process is finally over. With the Oct. 1 EMV liability shift deadline firmly in the rearview mirror, it’s time for many small business owners to look at what to expect in this post-EMV retail landscape. The shift was placed in motion to ensure additional security levels for both consumers and retailers who make transactions using a debit or credit card. The chip in the card acts to deter cybercriminals who attempt to hack into a business’s payment-processing system. Instead of swiping the magnetic strip on the back of the card, customers are supposed to dip the card into the payment terminal, which reads the chip embedded on the card.
Now that the liability shift deadline has passed, retailers who continue accepting magnetic-strip transactions will be held responsible for any fraudulent activity that happens. Time magazine called the magnetic strip the equivalent of an 8-track cassette – in that yes, the cards work, but they’re faulty and subject to hacks.
According to the latest data from Visa, after the U.S. only had about 20 million Visa chip cards in circulation during 2014, this number surged to approximately 363 million by October 2016. In total, MasterCard estimates that by the end of 2015, a total of 575 million EMV cards will be in circulation, according to Pymnts.com. Although these new cards are supposed to reduce fraudulent activity, the ever-growing number of individuals using these cards might potentially create some confusion and expose unforeseen risks.
While most businesses will maintain a POS system that allows for both swiping and dipping, owners should find ways to educate customers about the benefits of dipping the card as opposed to swiping it. Since the liability has shifted away from the banks and onto the retailers, failure to have customers dip the card into a POS reader can be costly.
Owners should consider displaying signs at the check-out point to remind customers who are used to swiping that they should dip instead. In addition, initiating a few training sessions for employees to familiarize them on the benefits of using the chip instead of the magnetic strip will also go a long way toward securing payment transactions.
Securing non-dipped transactions
Despite the widespread adoption of the EMV chip cards and the appropriate POS systems needed to read these cards, danger still lurks for customers and retailers. One of the major pipelines for hacking a person’s bank account or credit card information is still the telephone. This particular payment method is especially popular at hotels, restaurants and other establishments that typically take reservations or sales over the phone. In addition, online transactions also continue to reign supreme for many customers, and this also creates the possibility for fraudulent activity.
Beefing up the cybersecurity of both telephonic and online transactions not only helps alleviate customers’ concerns about cybersecurity risks, but it also reduces the potential for hacking or for unscrupulous employees to steal this sensitive financial information from customers.
The next big shift
In addition to the proliferation of EMV chip cards, many retailers and customers are also migrating to near field communications and mobile wallets, such as Apple Pay, Google Pay and Samsung Pay. While retailers are not being forced into transitioning to accept mobile wallet payments, a la the EMV liability shift, it is a trend that is only going to become more prevalent in the future as more individuals switch these smartphone-based payment options. As small business owners make way for the ever-changing world of payment processing, they should explore all options for customers to buy goods and services.