The United States is migrating from outdated magstripe credit and debit cards (which use the same technology as cassette tapes) to cards embedded with microchips.

This technology, also known as EMV (which stands for Europay, Mastercard, and Visa), is a safer form of payment for buyers and sellers alike. These cards are nearly impossible to counterfeit.

Many consumers already have chip cards in their wallets or will be getting these cards soon, but reading chip cards requires new technology.

In an effort to reduce fraud, EMV Chips are becoming the standard for integrated circuit cards (IC cards), IC card capable point-of-sale terminals, and automated teller machines.   Chip card transactions offer advanced security for in-store payments by making every transaction unique.  Chip cards are also much harder to counterfeit or copy.  If the card data and one-time card are stolen, the information cannot be used to create counterfeit cards and commit fraud.

For merchants and financial institutions, the switch to EMV means adding new in-store technology and internal processing systems.  To get chip-enabled for your business, contact your acquirer or payment services provider.

The Liability Shift

EMV card readers communicate with new technologies that are encrypted in the chips.

On October 1, the liability for certain types of fraudulent transactions will shift from banks to businesses that do not have the ability to process chip cards.

Buyers will want to use the new, more secure payment cards in their wallets, and card networks want to encourage more widespread adoption of these chip cards. That is why card networks set a date for a “liability shift.”

This means that starting on October 1, 2015 business owners that cannot process chip cards will have to foot the bill for some fraud losses that were previously covered by the banks.

Today, if an in-store transaction is conducted using a counterfeit, stolen or otherwise compromised card, consumer losses from that transaction generally fall back on the payment processor or issuing bank, depending on the card’s terms and conditions.

Beginning on October 1, 2015, a deadline set major U.S. credit card issuers including MasterCard, Visa, Discover and American Express, the liability for card-present fraud will shift to whichever party is the least EMV-compliant in certain fraudulent transactions.

Prepare for the migration. Upgrade your technology.

Payment security is good for everyone. It is important to be able to meet the needs of buyers that want to use more secure forms of payment.

In addition to EMV cards, we also expect increased adoption of contactless (NFC) forms of payment.

Contactless options like Apple Pay and Android Pay allow customers to pay with a phone or other device that is linked to a credit card. This option is fast, safe, and convenient.

Take advantage of the opportunity to upgrade your technology so that you can provide a better experience for your customers and accept all types of payments, including EMV or contactless.

Apple-Pay America is one of the new technologies on the market.

More Information

For more information about the migration to secure payment technologies. Square and the SBA are here to provide the information and tools you need. Please visit sba.gov/emv and squareup.com/townsquare.

Webinar Presentations on EMV

• 9/22/15 @ 2 pm ET – Payments Fraud Trends and the U.S. EMV Card Migration – What You Need to Know Financial institutions and their customers are targets of ever-evolving fraud schemes. This is a concern for small businesses seeking to protect their organization’s payment transactions. Join SBA and representatives from the Federal Reserve for this special presentation to help small businesses learn more about payment instruments that are most vulnerable to fraud schemes, fraud-fighting tips, and an update on the October 1st U.S. migration from magnetic strip to EMV cards and what it means for your small business. Registration is free but required. Click here (link is external) to register.
• 10/14/15 @ 2 pm ET – EMV 101 What Small Businesses Need to Know About the Switch to Chip Card Technology SBA and Square have teamed up to offer a free webinar to help small businesses across the country navigate the upcoming transition to EMV chip card technology.  Topics covered include what the transition to EMV chip card technology means for small businesses; what EMV chip card technology is and why it’s more secure; and how to prepare for new fraud liability rules impacting merchants beginning October 1, 2015. Registration is free but required. Click here (link is external) to register.

You can also download a copy of the presentation here.

Cosponsorship Authorization # 15-2050-102. SBA’s participation in this cosponsored activity is not an endorsement of the views, opinions, products or services of any cosponsor or other person or entity. All SBA programs and services are extended to the public on a nondiscriminatory basis.

This information is provided from the SBA Managing Business Finances and Accounting Blog.