Benefits and Concerns of the EMV Payment Process
The transition to EMV technology will bring benefits and a handful of potential concerns. For small business owners, the liability shift is a priority issue. "Previously, they didn't really bear any of that exposure for fraudulent charges," Cernak said. Costs associated with counterfeit transactions were pushed back to the card issuer. That changes after October 2015.
"Now if merchants don't make the switch, they'll be held liable for some of that," Cernak said. Because the liability will in large part reside with the entity with the least-secure technology deployed, Cernak said, "It's going to act as an incentive for small business owners to upgrade their point of sale systems to ensure they're not left holding the bag at the end of the day."
But Salmon says there are benefits to the EMV shift, too, for small businesses as well as for the customers they serve. The reduced risk of fraud and cyber crime should provide consumers and merchants with the peace of mind they've been missing.
"Basically, information is being sent from the card over the network and back to validate the process, and it's a one-time validation specific to that transaction. The information that's being moved is never stored anywhere on the terminal or within the merchant's infrastructure," Salmon said.
The new system significantly reduces the ability of malware or other cyber threats to pick up any pertinent information and then reuse or clone it for future transactions. Customer concerns about having their card information stolen should diminish. It's also good news for small business owners who have watched headline after headline trumpet the latest retail data breach.
Merchants won't need to worry as much, because "credit card information will not be stored on any of their machines or in their network," said Salmon.
How SMBs Should Prepare for EMV
Merchants who want to avoid the liability associated with less-secure technology should examine their retail transaction equipment and talk with their providers about upgrade options. "For small businesses that use a solution like Square, it's just a matter of getting a new dongle to put on your phone or iPad," said Salmon.
Many of those mobile platforms are putting the final touches on the new equipment that merchants will need for the October 2015 deadline, and small businesses can typically pre-order the accessories they'll need if the hardware isn't available yet. Providers of traditional POS terminals may already have new machines in their inventory—many of which have dual readers capable of processing existing magnetic stripe cards as well as the new EMV cards—and some small businesses have already switched over.
EMV Resources for Small Business Merchants
If you'd like additional information on the switch to EMV technology or on the associated liability shift, check out these resources.
- EMV Chip Payment Technology Frequently Asked Questions (PDF; provided by the Smart Card Alliance)
- Visa U.S. Merchant EMV Chip Acceptance Readiness Guide: 10 Steps to Planning Chip Implementation for Contact and Contactless Transactions (PDF)
- EMV for U.S. Acquirers: Seven Guiding Principles for EMV Readiness (PDF; provided by MasterCard Advisors)
- American Express has set up a small business merchant Web page that includes FAQs, a Chip Card Technology 101 video, and information on upgrading current systems.
- Discover has also established a merchant Web page that provides information on the liability shift and provides resources on deploying EMV-compliant equipment.
Julie Knudson is a freelance writer whose articles have appeared in technology magazines including BizTech, Processor, and For The Record. She has covered technology issues for publications in other industries, from foodservice to insurance, and she also writes a recurring column in Integrated Systems Contractor magazine.
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