Restaurant Owners: HAVE YOU UPGRADED TO EMV YET? Keith Larson
EMV – which stands for Europay, MasterCard and Visa – is a global standard for cards equipped with computer chips and the technology used to authenticate chip-card transactions. Only 37% of merchant locations are currently ready to process EMV, leaving 15 million to be upgraded at a cost of between $500 to $1,000 each. According to CreditCards.com, 70% of consumers had a chip card as of March 31, 2016, leaving an estimated 1.2 billion credit and debit cards that still have to be upgraded, at an average cost of $3.50 each.
Previously if an in-store transaction was conducted using a counterfeit, stolen or otherwise compromised card, consumer losses from that transaction (dubbed “chargebacks”) fell back on the payment processor or issuing bank, depending on the card’s terms and conditions. However, following an Oct. 1, 2015 deadline created by major U.S. credit card issuers MasterCard, Visa, Discover and American Express, the liability for card fraud shifted to whichever party is the least EMV-compliant in a fraudulent transaction.
As a result of the rapid transition to EMV, criminals are ramping up their efforts to cash in on the remaining magnetic strip cards, as fraudulent transactions are estimated to rise to $4.5 billion this year, up 12.5% over last year. They are using personal credit-card data stolen during previous breaches at Target, Michaels and other retailers. The thieves can use the data to create fake plastic cards with magnetic stripes for shopping at brick-and-mortar stores.
Merchants that have implemented EMV have seen a reduction in fraud. In January, chip-enabled merchants tracked by Visa had seen a 26 percent year-over year reduction in dollar volume of counterfeit fraud, Visa said.
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So far, the large majority of chip cards going into the hands of cardholders are coming from larger issuers like Bank of America and Chase, according to the Federal Reserve Bank of Chicago. And EMV debit cards are being issued at a slower pace because banks have to accept those new cards as well, so the cost and the time to prep their software is causing smaller banks to convert their cards more slowly. Further, many retailers have been delayed by waiting times to install and certify the software and equipment needed to process chips, and many delayed implementing EMV until being hit with chargebacks. Acknowledging this, VISA recently eased its chargeback rules to offer some relief, and Mastercard is expected to announce measures that will make it easier for retailers to get their equipment certified, according to Chiro Aikat, a senior vice president at the company. “It’s still in the early stages,” he said, according to Bloomberg News. “The tipping point is where 60 percent of terminals are chip-enabled… that’s when on a market level you see the benefits. We are not there yet.”
Retailers using mobile payment devices such as Square will also have to purchase new equipment. Square has designed EMV-compatible card readers for Android and iOS devices that can read contactless mobile payments and also process dipped chip cards. Merchants can purchase the new payment devices for $49. https://squareup.com/