If you’re a retailer you will involuntarily have to spend some money this year. It will likely be between $500 and $1,000. Maybe less, maybe more. You will have little choice. But you will do it.
That’s because come October, 2015 all of the major credit card companies are going to shift liability to you, the retailer, for credit card fraud unless you’ve adopted EMV technology in your store. EMV (which stands for Europay, MasterCard and Visa) will ultimately require that your customers, who will throughout this year be receiving new credit cards with a chip on it, enter a PIN when buying anything, whether it’s from their debit or credit card. This is a significant thing. The PIN adds an extra level of security to the purchase and the chip adds a more advanced level of encryption to the transaction.
Will this cost you? Yes, it most certainly will. Depending on the point of sale system you use new EMV compliant terminals are a few hundred dollars, on average. The typical retailer may need more than a few of these around the store. The typical restaurant owner may need a handful of these devices so that wait staff can accept payment at the table. The store owner who’s already adopting mobile payment tablets and devices will need to ensure that these are EMV compliant too. Which means you’ll need to upgrade. And if you have more than one terminal your cost could easily reach, or exceed a thousand bucks.
The big beneficiary of this is the finance industry. Finally, they can shift the burden of liability to the merchant. Their cost of investigating fraud, battling consumers and charging back merchants will be significantly reduced. Their exposure to significant liabilities will also be reduced. And yet no one expects annual or transaction fees to decline. In effect, it’s a big, profitable move for the industry.
The question is: is this fair to the merchant? The answer is also yes. And for three reasons.
Your chargebacks will be reduced.
Sure, the finance companies will be making more profits. But so will you. Today when there’s a fraudulent charge made the credit card company can, and often does, charge back the sale to you. Which means that you basically gave away product for free to a criminal. EMV technology has been around for a number of years in Europe and other parts of the world and studies have shown a significant reduction in fraudulent charges when it’s used. So your exposure will go down and your profits will go up.
You will move forward.
Ever get an assessment from your landlord who’s updating the look of his strip mall? Ever suffer through a falloff in business when necessary roadwork is being done outside? Ever have to fork over thousands to modernize the look and feel of your store? Every retailer goes through it. Times change and you have to change with it. It’s a cost of doing business. If you don’t spend then you fall behind – your place will look old fashioned and your technology not keeping up with the times. Ultimately this costs you business.
Your customers will demand it.
All of us will be receiving cards with EMV chips throughout the year. We hate it when we’re defrauded. It’s a huge inconvenience and sometimes even a financial liability. If you don’t have EMV compliant systems then soon enough we’ll be wondering why. We’ll question the security of our credit card information with you like your competitor down the street. And, all other things being equal, we’ll go to that competitor. Your customers will ultimately expect compliance.
The move to EMV is long overdue. But it’s a necessary step forward. Take a deep breath. Spend the money. And move forward. In the end, it’ll be worth it.