Top 3 ways EMV cards have changed small business
Understandably, the October 2015 fraud chargeback liability shift was a big change for U.S. businesses, and adopting compatible point of sale systems for EMV cards has not been the only adjustment merchants have had to make. In addition to updating or buying a new POS solution, U.S. businesses have had to comply with the adoption of EMV cards in three significant ways.
Understanding the liability shift
Although the U.S. has had strong card securities in place prior to the liability shift, EMV cards provide heightened protections that the magnetic stripe cards lacked. Easily counterfeited, traditional cards were responsible for the majority of U.S. card-present fraud. As of the October deadline, most cases of fraud liability were transferred to merchants who failed to comply with EMV adoption.
To be fully compliant, companies are encouraged to invest in EMV-enabled POS software. These solutions require customers to “dip” their card into the terminal as the system reads and approves the chip. While implementing an EMV reader is not mandatory, without it, merchants may continue to worry about the potential for fraudulent charges and their costly consequences.
Like the U.K., which has experienced a 63 percent decrease in fraud since adopting chip cards in 2005, the U.S. hopes to receive a similar return for its efforts to become chip card enabled. Despite EMV chip card technology creating effective obstacles to card-present fraud, as many earlier adopting countries have already witnessed, it diverts fraudsters’ attentions elsewhere – online to card-not-present fraud.
Preparing for ecommerce fraud
A familiar trend globally, as soon as the chip cards have been introduced, online fraud rates increase exponentially. With the introduction of tighter securities, hackers begin looking for alternate means of stealing cardholders’ sensitive personal information. Since EMV cards make it more difficult for hackers to use counterfeit, lost, or stolen information at POS terminals, the criminals are targeting ecommerce sites since online payments have no chip verification process.
To ensure that their customers and business as a whole are protected, merchants should look into their fraud prevention measures and implement additional security measures for their ecommerce sites, if feasible. Furthermore, businesses should consult with their POS providers about their current update strategies and how they can be improved. With frequent system upgrades, it will be more difficult for hackers to infiltrate networks and steal customer information.
Accepting mobile payments
Although investing in a new, EMV-compliant POS system may add additional expense for small businesses, the long-term benefits and cost savings are worth the investment. A chip reader will cut back on fraudulent charges and the associated monetary penalties. But many EMV readers also give merchants one extra advantage: the ability to accept mobile payments.
Near-field communication is quickly gaining traction among consumers and businesses. Apple Pay and Google Wallet, among many others, are becoming popular payment alternatives. In fact, the market for contactless payments is expected to reach $142 billion by 2019.
Mobile payments offer additional security measures like including tokenization and encryption, and the method may help protect small businesses even further. With the cost savings associated with implementing an EMV and PCI compliant POS system, companies have an additional incentive for introducing the contactless tactic.
As time goes on, small businesses will continue to feel the effects of the EMV card transition. The EMV liability shift is a large adjustment for many merchants, many who have had to invest in new and updated POS solutions to maintain compliance. While U.S. companies are waiting to see if the implementation of chip-enabled cards will have the same impact as it did in other countries, additional research and studies of the reduction of fraud due to EMV will need to be completed over the years. For now, however, enterprises should use the transformation to focus on the liability shift, ecommerce fraud prevention, and making the most of the latest mobile payment acceptance capabilities.