Credit Card Technology is Changing. Are You Ready?

By Cameron Brown / VP Merchant Services Mission Valley Bank

Is your business' merchant processing system EMV (Europay, MasterCard, VISA) ready? To begin, it's important to understand the specifics of this Euro-based bankcard technology that has been in place in Europe for well over a decade. Unlike current credit and debit cards in the United States that utilize a standard magnetic strip on the back of the card to house all customer information, EMV utilizes a small chip inlay on the front of the card. Such technology drastically reduces bankcard fraud, chargebacks, and questionable purchases as the "smart chip" technology relies on integrated circuits within the chip to transmit and store consumers’ valuable personal information.

As most financial institutions have begun issuing these EMV cards to replace the standard magnetic technology, it is essential for a merchant to be adequately prepared for the conversion. With over 90-percent of merchants still relying on card-based and online terminals that are non-EMV ready, the risk of fraudulent exposure for these businesses significantly increases. Beginning in October 2015, all merchants without an EMV ready terminal take on the full financial responsibility and risk in the event a chargeback occurs. A chargeback can transpire multiple ways: A dissatisfied customer calls their bank to refute either a product or service received from a merchant; a lost or stolen credit/debit card resulting in a fraudulent purchase; or perhaps a reversal of an unauthorized purchase due to identity theft. All of these are examples of typical and unfortunate, reoccurring reasons for a chargeback.

So what does this mean for the merchant? Well, if the merchant accepts a chipped or EMV bankcard, but does not have the proper EMV-ready merchant terminal in place, the merchant is solely and directly responsible for the chargeback—regardless of the amount. The consequences from this can be catastrophic, especially for smaller businesses who rely on the day-to-today merchant bankcard business to keep their establishment afloat.

If you have not done so already, consult your current merchant processor and request an EMV ready terminal. Doing so limits your business’ liability, and allows you to reduce unnecessary losses to your valued business. You can also contact myself, Cameron Brown, Merchant Services and Sales Manager for Mission Valley Bank at 818-394-2382, to further discuss how you and your business can be best prepared for this universal industry change.