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Image of person tapping credit card to make a payment

The Move to EMV: What Businesses Need to Consider

August 25, 2015

October 1, 2015, will mark a significant shift for businesses that accept credit card payments. On that day, merchants will need to upgrade their payment terminals to accept EMV (Europay, Mastercard, and Visa) payments, or take on new liability risks.

This regulation will have a big impact on businesses and fraud in the United States – and it’s coming quickly.

Why is the change occurring?

EMV is widely used across the globe. These credit cards employ chip technology to complete transactions rather than the magnetic stripe we’re used to in the U.S. The chip is much harder to replicate than magnetic stripes, so the move will bring significant security benefits to American consumers and businesses. As a comparison, in the United Kingdom, counterfeit fraud loss due to credit cards has dropped by more than 60 percent in the past 10 years since the adoption of EMV technology.

What does this mean for businesses?

On the positive side, credit card fraud should decrease as EMV becomes the norm. However, this process will take time as we are not going to see 100 percent EMV adoption by October 1st.

In the interim, businesses accepting credit cards need to weigh the cost of converting their terminals with the potential for greater losses due to fraud.

In the U.S., banks and card issuers previously assumed financial liability for credit card fraud, but after October 1st, merchants who have not upgraded their payment terminals to accept EMV must take on the financial risk of this type of credit card fraud loss.

There are a number of implications with this fast-approaching deadline:

Businesses that don’t upgrade their terminals

You will need to plan for chargebacks and lost funds due to credit card fraud. Without the safe harbor of the banks and card issuers, companies will need to factor these costs into their budgets. Unfortunately, there aren’t many reliable projections out there.

Businesses that do convert their terminals

It’s important to recognize this is a process. It’s not enough to simply buy a terminal; you’ll need to certify its payment application for EMV and get certification through your bank for each card network you accept.

Already, we’re starting to see a bottleneck in the conversion system, so if you want to have this completed in the fall, it’s only going to get tougher. Get moving!

For all companies

EMV will change the face of the payments landscape. As it gets harder for fraudsters to make money from credit cards, they will look for other avenues.

We expect the move to EMV will result in greater fraud in card-not-present transactions, so if your business accepts online payments, you’ll need to consider ways to beef up your security. We recommend implementing authorization measures like Verified by VISA or MasterCard SecureCode for your online transactions.

Additionally, we expect the move to increase check fraud. If your business uses checks as a payment method, we recommend you:

  • Use positive pay with payee match or reverse positive pay.
  • Set the default for reverse and positive pay exceptions to “not to pay.”
  • Use a high security check printing system and blank check stock.
  • Ask your bank about their process for check destruction and check fraud prevention.
  • For RDC users, make sure your bank is invested in a duplicate detection system.

No matter how your business is reacting to the EMV regulations, October 1st will mark a significant shift for companies and the way they approach risk, fraud, and their own security measures.

As your company approaches the EMV conversion, know that we are available to review your accounts and payments systems, and provide recommendations to help them work more efficiently.

If you need help through the EMV conversion, would like to discuss your company’s accounts, or want to discuss your strategy in light of upcoming regulations, please contact our Treasury Management experts at 303.531.8100.

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