The EMV Liability Shift – What You Need to Know This October

In a few short weeks, your enterprise could be on the wrong end of a liability claim if you don't have the right technology in place. Will you be prepared on October 1st?

The EMV Liability Shift

In the event of credit card fraud today, the bank is often accountable for fraudulent charges and the cost of replacing stolen credit or debit cards. However, that liability is set to change based on the technology the merchant has in place, the cards the banks provide their clients, and the payment method the shopper chooses. The EMC "liability shift" means you could be on the hook for certain types of in-person credit card fraud if you aren’t set up to accept chip cards (EMV).

So What's the Difference

EMV Chip Card

For card present transactions (meaning you have the card in front of you) there are 2 ways to process the transaction. You can either Dip the chip or swipe the card. Dipping means that the EMV (or chip card) is entered into the reader and left in place for the duration of the sale. Swiping the card is taking the magnetic stripe on the back of the card and running it through the reader.

What This Means for You

If you are processing a card that doesn't have the EMV chip (aka Magstripe) your bank is still liable for fraudulent charges. However, if it is an EMV chip card and you swipe it the traditional way, you'll be liable for any fraudulent charges.

After the October shift, having the new Chip and PIN tech in place is essential for vendors that want to avoid any potential liability claims. This takes some planning, but will reduce the risk of your business being associated with any additional fraudulent activity. Here's a couple of quick tips:

Upgrading to EMV by October is not a law.

There is no actual law that requires businesses to be EMV compliant by October. It is up to each business to decide if they want to comply. After the 1st of October, retailers need to have updated POS systems in place that can accept EMV chip cards. If not, they will be the ones caught with "outdated technology" in the event of credit card fraud.

Upgrading to EMV is not expensive nor time intensive.

Depending on your POS (point of sale) it may be as easy as ordering a new reader and training your staff. If you are using a platform like Square, all you have to do is to request a new card reader at a cost of $49 per terminal. The biggest headache may be getting your staff up to speed to make sure that they are looking for the EMV chip on the cards.

Once you implement EMV you can still use magstripe cards.

If the card being presented has an EMV chip, you'll need to process it as an EMV transaction (and dip instead of swiping the card) to be protected. If the card doesn't have the EMV chip you can process it as you always have.

Next Steps

The key to meeting this deadline and protecting your enterprise is to take action as soon as possible. Start the transition today, and avoid any fraud charges for outdated tech.

Get in touch with your payment processor and find out if you are already EMV compliant or if you need to take action to be covered. Contact us at Codelation if you're not quite sure what to do, we'd love to help out.