Merchant Service Providers Are Dropping the Ball on EMV

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The majority of merchants we talk to have little to no knowledge of what EMV is or why it is becoming mandatory for all businesses.

Those who are aware are often reluctant to make the switch. This fact, to us, means that they don’t truly understand what EMV is and why it’s such a game changer for the industry.

The trend of lack of knowledge and resistance to change in regards to EMV is in large part due to the merchant service providers’ approach to the upcoming liability shift.

Because merchant service providers will not face financial liability with the upcoming shift, many have not prioritized ensuring their customers know about or have made the change. Or, if they are educating their customers on the liability shift, many MSPs are using it is a money-making gimmick by charging high markups on new equipment.

Many merchants will admit that although they have heard about EMV and know it has to do with the new chip technology, they are unaware of what it really is and how it will affect them. In 2014, 96.6% of card present transactions ran in Eurozone 1 were EMV compared to 0.12% in the United States. Merchants have been dragging their feet in making the shift but come October 1st, when the EMV Liability Shift goes into place, EMV will be here in a major way and it’s about time.

The chip technology used for EMV stores data on integral circuits, unlike the traditional magnetic strips. Customers #DipTheChip on their EMV cards into readers on EMV compatible terminals, and the chips utilize end-to-end encryption and unique codes to process each and every transaction.

The utilization of unique codes ensures that if a hacker ever steals the card information from a point of sale, it is impossible for them to profit from it as each code can only be used once. For even more security, EMV requires the use of a personal pin code or signature to verify every transaction. This means merchants will face fraudulent card use much less often. It also means merchants need to make sure they have EMV compatible equipment so they are not held financially liable in case a fraudulent card is ever used.

For merchants who know about EMV and have chosen not to update their equipment to be EMV compatible, I highly suggest they reconsider, given the fraud liability shift that will occur after Oct. 1.

By switching equipment to be EMV compatible, merchants are not only showing they value customers and the security of their payments, but are also freed from the financial liability if a fraudulent card is run. Instead, the financial liability will be on the bank as it has been in the past. It is currently projected that only 34% of merchants will be ready come October. The good news is there’s still time, but not much.

Merchants should get your business EMV ready ASAP and make sure they have a merchant service provider who is on their team.

Suneera Madhani is CEO and founder of Fattmerchant.

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