Merchant Bankcard Conversions Less Costly Than the Alternative

As financial institutions scrambled to issue EMV cards – short for Europay, MasterCard, and Visa chip technology -- to replace the standard magnetic technology, merchants prepared for the conversion. Merchants without an EMV-ready terminal in place now take on the full financial responsibility and risk in the event a chargeback occurs.

A chargeback can transpire in 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.

With the shift in liability, the consequences for not converting could be crippling for any small business. Consider, for example, a $1,500 fraudulent purchase made at a local retail store with a chipped card that was recently lost or stolen. Once the transaction is processed and the merchant informed of the fraudulent activity, that merchant is now directly responsible for the $1,500 chargeback if the transaction was processed on a non-EMV-ready terminal. In contrast, if the business accepted this transaction and was EMV compliant, the merchant would not be liable for the loss.

By the merchant not taking the necessary precautionary measures to secure an EMV-ready terminal, the merchant becomes solely responsible for the chargeback, and any future chargebacks that may occur.

For merchants concerned with the costs and conversion process, it’s a relatively simple and cost efficient transition. Available to most merchants, a simple upgrade to an EMV ready terminal (i.e. Verifone VX520) costs less than $350 to own, or a nominal $20 per month to lease. Changing out a merchant’s old terminal with one that is EMV ready takes no more than 10 minutes to complete. Most conversions only require unplugging the power cord and phone line/Ethernet cable and reconnecting to the new EMV terminal.

If you haven’t already done so, contact your current merchant processor and request an EMV processing solution that is right for your business or call Mission Valley Bank at 818-394-2382 for a no-cost evaluation.