So what does this mean for businesses? As many already now, October 2015 was an important deadline set by the payment industry when liability costs that had been up to that point on the shoulders of banks would “shift” to merchants. Even if business owners never give a thought to their card payment system, their attention is grabbed when they begin to be charged for fraudulent purchases made in their store. That is the dreaded chargeback.
What is a chargeback? Think of a chargeback like this. Bad Guy Bob in Arizona steals the card information from Jane in Alabama and uses it to purchase $2,000 in merchandise from Joe’s Widget Shop. When Jane receives her statement, she contacts her bank to say that she didn’t make the $2,000 transaction. The bank then initiates a chargeback because of fraud. Once it is determined the transaction was fraud, the cost for that transaction will either fall to Jane’s bank or to Joe’s Widget Shop. Prior to October 2015, the cost would have almost always fallen to the bank, but after the EMV deadline of October 2015, the cost falls to the retailer if they are not EMV-enabled. Generally, the party supporting the most secure technology will “win” in a chargeback dispute, thus pushing the fraud liability back to the less secure party.
Wait...there's more.
If that is not convincing enough that EMV can have an effect on a business’s bottom line, some companies have announced that they will begin charging “EMV non-compliance fees” to businesses that don’t accept EMV cards. One large card processor, NPC (National Processing Company) of the Vantiv company, has already begun charging fees to its customers in noncompliance.
While debit and credit card processing may not be the most exciting thing to consider in a business, the financial incentive and heightened security of EMV cards has made it worth the time and investment to make the switch.