Compliance Weak After EMV Liability-Shift Deadline

by Intrepid Payment Processing

October 1, 21015 was a momentous date for the American merchant payments processing industry. We are now in the Europay, MasterCard, Visa (EMV) chip card era, which means greater security and compliance. EMV is not only a technological shift; it is also a major shift in terms of liability and responsibility for credit and debit card issuers as well as for merchants.

As the situation currently stands, any business that accepts a physical card transaction could be liable in case of fraudulent use. In the past, merchants in the United States had some responsibility insofar as taking measures to prevent card fraud, but liability ultimately fell on the card issuers; that is no longer the case. The EMV system is designed to provide more security than the old magnetic stripe system; to this effect, merchants who do not upgrade to the new system are essentially on the hook should fraudulent use occur at their business.

It is important for American business owners to realize the gravity of the EMV shift. A couple of years have passed since this matter was stressed in the wake of the massive data breach suffered by giant retailer Target; since that time, a little more than a quarter of all merchants in the U.S. had upgraded their terminals. It is estimated that less than half of all merchants will be EMV compliant by next summer. What is truly concerning is that not all business owners who accept card payments are fully aware of the implications of the EMV shift.

A week after the October 1 deadline, the Small Business Committee at the House of Representatives looked into how much, or how little, progress has been made with regard to the EMV upgrade. One Committee member explained that the EMV transition has caught many merchants off guard. Even in the best case scenario, it may take two or more years for 60 percent of merchants to upgrade.

Considering how sizable the American retail landscape is, the fact that more than a quarter of all merchants have already upgraded their systems is auspicious. The EMV shift may not be off to the greatest start, but what has been accomplished thus far amounts to a lot in terms of compliance.

Although the EMV upgrade is not a mandate, the liability shift should be of the utmost concern for merchants. More than half of all credit and debit card fraud takes place during physical transactions, and merchants are now liable if they do not comply with the EMV shift. Criminals are aware of the EMV shift, and they are planning to make final runs on the old magnetic stripe system; for this reason, it is in the best interest of all merchants to upgrade as soon as possible.

 

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