Practically every country in the world has fully transitioned from magnetic stripe cards to EMV-enabled credit cards—except for the United States. Named for the three companies that created it—Europay, MasterCard and Visa—EMV is a tiny chip embedded in payment cards that is virtually impossible to counterfeit and offers much stronger security features than most American cards. As its usage grows here, bankers and business consultants are uniquely positioned to help small businesses make this crucial transition, toward a more secure future.
EMV is the name for the secure chip embedded in more than 2 billion payment cards worldwide – the vast majority of them outside the United States. The reason for their popularity is simple: They dramatically reduce card fraud. Although the technology is still not widely known in the United States, the benefits of EMV are too strong to overlook for long.
Did you know?
Although the United States accounts for only a quarter of the world’s payment card transactions, more than half of all fraudulent card transactions happen here.
Losses due to card fraud in this country are expected to top over $10 billion in 2015.
Credit card fraud rates have doubled in recent years, representing 10 cents out of every $100 transacted.
Europe has already greatly reduced card fraud with EMV. For instance, fraud in the United Kingdom dropped 27 percent between 2007 and 2012, the years when EMV cards became widely accepted in that country.
The Impact of EMV on Small Merchant Businesses
The date of reckoning for EMV cards is swiftly approaching. After October 1, 2015, if a consumer uses an EMV chip card with a merchant who doesn’t have an EMV-compliant terminal, and the transaction is found to be fraudulent, the liability for any charges is left with the merchant. The main reason cited for not upgrading,a lack of knowledge about EMV. According to market research by Javelin, more than half of small business owners have little or no knowledge of EMV – or this upcoming liability shift. Not surprisingly, nearly three-fourths of small business owners have no plans to upgrade to EMV compliant terminals by the end of 2015. By shifting to EMV, your customers can eliminate any exposure or losses to card fraud for card-present transactions at their business. EMV offers a choice – merchants can either eliminate risk by upgrading their systems, or do nothing and simply live with the possibility of taking a major hit due to card fraud sometime down the road. As they become more aware of EMV’s ability to keep their data safe, consumers will naturally gravitate towards it. And if a merchant isn’t ready to take an EMV payment, it will translate into lost business—business that most small merchants can’t afford to lose.