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4 Months Until EMV Liability Shifts — Are You Ready?

By the end of 2015, the United States will join the rest of the world in adopting EMV credit cards as the standard for in-store retail purchases.  Short for Europay, MasterCard, and Visa, each EMV comes with a security chip that must be present to initiate a transaction.  To complete a purchase, customers must either:

  • Enter a personal identification number for Chip & PIN cards
  • Sign a receipt with Chip & Signature EMVs

Unlike traditional magnetic stripes, these security chips are very difficult to clone.  Thus, brick-and-mortar retail environments that rely on chip and pin or chip and signature cards reduce their risk for credit card fraud.  This is why most major markets have already made EMV technology mandatory.  In the next four months, the United States will "unofficially" follow suit.

Why unofficially?

Both retailers and credit card issuers will always have the option of using older forms of plastic.  Yet new liability laws go into effect at the end of 2015:

  • If a customer uses an EMV-enabled card on a terminal that isn't chip enabled, the merchant is responsible for any fraudulent charges that may arise.
  • If a customer uses a magnetic stripe card at an EMV-enabled reader, the credit card issuer is responsible for any fraudulent activity.

As the EMV deadline quickly approaches, merchants and banks are scrambling to update their technology to reduce their exposure as much as possible.  Credit card issuers are having an easier time with this transition since they’re accustomed to providing customers with new cards every few years.  At the end of 2014, there were already 100 million EMV credit and debit cards in circulation.

For many U.S. merchants, making the change is a little more difficult.  In order to become EMV ready, they must switch legacy terminals with chip-enabled readers.  This process alone is expected to cost retailers more than $2.6 billion over the next several years.

Merchants must also learn how to use this new EMV technology — complete with employee training and customer education.

Because of these extra hurdles, many businesses are in danger of missing the 2015 deadline.  This is particularly true of smaller businesses that are often reluctant to spend money upgrading their payment infrastructure.  Analysts predict that EMV technology won't become universal until 2018 at the earliest.

If you haven't made the switch already, know that you are not alone.

However, delaying the transition could be dangerous for several reasons:

  1. Whether you are ready or not, the liability laws will go into effect on October 1, 2015, less than four months away.  You'll be held responsible for any fraudulent activity if your customers shop with EMV-enabled cards.
  2. Your store becomes an attractive target for thieves and hackers.  EMV is a proven technology for reducing fraud.  Merchants who don't embrace chip-enabled terminals become low-hanging fruit.
  3. You'll likely lose sales as consumers gravitate toward merchants who invest in credit card security.  Why risk doing business with you if competitors are able to offer better protection?

Although making the switch carries certain upfront costs, the investment is well worth it when you consider the reduced exposure that your store faces as a result.

At BluePay, we can help make the transition as smooth and painless as possible.  To learn more, contact our payment security team today.

Topics: EMV

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