Is EMV compliance really going to be required in October 2015? Many processors and ISO’s are using this scare tactic to try and make sales but the irony is that they are using the wrong scare tactic. The truth is actually much more scary than “non-compliance.” After all, 80%+ of the small business clients we speak to are not PCI Compliant and for most of them, this hasn’t been a problem. So, why is EMV different and why will they want to be EMV compliant even though it isn’t required? The short answer, EMV non-compliance could be very, very expensive for them.
CLICK HERE to read another article on the effects of EMV Compliance (Thanks John Lange for sending me this one!)
Although PCI data breaches do happen and they are catastrophic when they do, they don’t happen that often to small business owners. In fact, it is highly likely that in a group of 10 or 15 small business owners that know each other, non of them have experienced a serious data breach due to non PCI compliance. However, all of them have experienced fraudulent transactions, whether they know it or not. In other words, people steal credit cards and credit card data all the time and use it in a store. The majority of the time it is actually family members or other connected individuals that use cards fraudulently and this results in a report to the card issuer.
In the past, these card issuers covered the liability on these types of transactions. In other words, let’s say that a person came in and spent $100 using someone else’s card and then the card owner called the card issuer (Bank) and complained, the card issuer would refund them this money but the business owner might not even know about it. What is happening in October of 2015 is that this liability will shift down the line to whoever is not EMV Compliant. Obviously the processors will make sure they are able to process EMV and they will make the technology available to their merchants at a cost but if the merchant doesn’t get an EMV compliant terminal and a fraudulent transaction takes place, the issuing bank will hold the small business owner responsible for the transaction in much the same way as they do for a chargeback.
The rational is that if the small business owner had an EMV Compliant terminal installed, the fraudulent transaction would not have happened because the person using the card would not have known the pin number, etc. I think this rational is a little flawed myself but, it is an opportunity for the banks to pass a significant amount of liability on to the small business owner and it is being used as the primary incentive to force EMV Compliance into the US market.
The time has come to start educating your clients on EMV. Don’t use the scare tactics that “EMV is going to be a law next year!” Rather, tell them the truth that any fraudulent transactions that happen in their store will come back on them just like a chargeback. I can assure you that our company is intently focused on this and we are ensuring that our technology solutions will be ready to accept EMV transactions long before the October 2015 deadline and we are already deploying credit card terminals that have EMV capabilities that will be turned on in early 2015 as the new smart cards start to dominate the market.
Have a great day in the field!
James Shepherd
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