The Europay, MasterCard and Visa chip-and-pin system likely isn’t news to large businesses, but many smaller merchants aren’t yet compliant with the regulations related to EMV cards. That lack of compliance could turn into real financial problems. If companies don’t have the relevant software and hardware in place by the EMV conversion deadline in October, liability will shift to them for fraudulent transactions. This change in responsibility can have a very real, direct and negative impact on smaller organizations should they unwittingly process a fraudulent transaction or fall victim to a coordinated scam.
The numbers behind the adoption issue
A recent poll conducted by Javelin Strategy & Research and reported by Payments Source revealed a telling statistic about the EMV conversion: Only 25 percent of merchants will have the right systems in place to be fully EMV compliant come October. That percentage includes all retail businesses operating in the U.S., which means it includes the largest chains – companies that are more likely to make the switch because they both have access to necessary capital for such improvements and have strong corporate oversight driving the adoption of new standards. It’s difficult to determine the percentage of small and midsize businesses ready for the shift, but there’s little doubt that figure is lower than the one representing the entire market.
While the research results are based on data originally collected at the end of 2014 – meaning it could indicate a lower adoption readiness level than a survey taken in the present day – it indicates serious issues with EMV use in the U.S.
Two major problems standing in the way of more adoption among SMBs are general awareness of the standard and the need for funds to purchase the required EMV-enabled point-of-sale systems. Another issue related to the lack of awareness is the absence of legal or regulatory penalties in place to stop companies from operating without EMV technology. As penalties are only incurred if a fraudulent transaction is processed, some business owners may feel they don’t need the system in place. However, merchants need to understand it’s only a matter of time before they have to deal with fraud liability.
The real benefits of conversion
Beyond the practical benefits and financial security of making the EMV switch, The New York Times said EMV has cut most types of credit card fraud by an average of 65 percent in Europe, where it’s been close to fully in place since the late 2000s. This results in less time spent dealing with fraudulent charges by both retail businesses and financial institutions. Additionally, the presence of stronger fraud prevention systems can discourage criminals from targeting businesses with EMV in place.
EMV is ultimately about more security for merchants and associated businesses, a goal that we’re very familiar with here at Whitepages Pro. While the cost of purchasing and implementing EMV equipment may be discouraging some small-business owners, the long-term benefits and removal of fraud liability are simply too beneficial to pass up.
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