Your Merchants and EMV

Some small merchants may question the practicality of adapting EMV when taking into consideration the costs involved and level of resources needed. Consider the likelihood that once consumers begin to recognize the security improvements EMV offers, their behavior will begin to shift as well, and cardholders will come to expect all retailers – large or small – to offer the added layer of security that EMV provides. Or, customers may look to make purchases only from merchants who have implemented this solution, considering those retailers as a ‘safe place to shop.’ One must also bear in mind that the consumer base will include your handful of criminals, looking to take full advantage of businesses that don’t support EMV.

A mere 27% of U.S. merchants were EMV-ready by the October 2015 deadline. – The Strawhecker Group Survey Estimate

Merchant Liabilities

The rules have changed. Due to the recent liability shift, merchants accepting chip are now protected from fraud losses resulting from in-store counterfeit magnetic stripe card transactions. However, liability will shift from issuers to merchants if their payment terminals are not chip-enabled for in-store transactions. Fraud liability for lost or stolen cards varies by payment network.

Eventually all face-to-face merchant environments will be impacted; however, some merchants may not believe they are at sufficient risk for fraud liability to make the investment in new equipment and software right away. Large merchants will either have in-house expertise or contract with an external developer — possibly you. Small merchants are more likely to have a self-contained, stand-alone point-of-sale (POS) device already coded for their acquirer’s platform. Other merchants may look to solutions from independent solutions providers, appointing a specific point of contact to help facilitate the overall implementation process.

73% of Small Business Organizations (SBOS) aren’t concerned about fraud1, however 78% of SBOS have experienced at least one data breach over the past two years2. Meanwhile, hackers are seeing a whopping 1,425% ROI3.

If an EMV card is presented to a merchant that has not installed EMV terminals, liability for counterfeit fraud will shift to the merchant. Unfortunately, as a result, the merchant could incur unwanted additional chargebacks and losses.

Merchant Opportunities

Merchants should expect to see a reduction in card fraud and fewer disputes, plus the capacity to update their terminals to accept additional faculties such as Near Field Communications (NFC). Restaurateurs could also benefit from the shift of payment acceptance to the tableside. This can positively impact food service providers, as it will limit wait staff steps and reduce waiting periods, creating quicker service and turn tables faster – ultimately, delivering a more efficient process and an enhanced customer experience – all favorably affecting the merchant’s bottom line.

Merchant opportunities lie in their ability to offer customers a wider choice of state-of-the-art methods of payment acceptance, so that they can confidently provide goods and services in exchange for payment within a safe and secure environment.

What happens if your merchant doesn't become EMV capable?

In order to avoid potential liability while ensuring customer transaction security, many merchants still plan to implement EMV technology, if they haven't already. This will help merchants reduce the risk of being held financially responsible since card-present counterfeit fraud liability has shifted. Under the new rules, liability now falls to the party with the least transaction security. As a whole, businesses with non-EMV compatible terminals will be held accountable for some of the associated costs of card fraud. The exceptions are petroleum businesses, specifically those with automated fuel dispensing payments at the pump, as some liability shifts for these types of transactions will not occur until 2017. In addition, ATMs also have alternate target dates, the earliest of which is MasterCard’s liability shift deadline in October 2016.