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EMV – Killer Initiative Threatens Every Business

EMV Credit Card

By guest blogger Jonathan Arst, CEO of Merchant Consulting Group, Salem, MA

The initiative hit the books on October 1st of last year, yet many restaurants, retailers and businesses are not adequately prepared for it – and it could cost these businesses thousands in equipment upgrades and fraudulent charges.

Update 08/04/2016 – via WSJ article

The initiative can hardly be called a success. Visa estimates that only 28% of the total merchant population in the U.S. supports chip payments currently. Worse still, chip transactions are taking twice as long as swipes, creating longer checkout times for the merchants (and consumers). Industry experts expect that the situation will push many consumers to bypass chip cards altogether and pay via their smartphones. This may give the mobile payment industry just the push it needs.

Update 11/30/2015 – via WSJ article

Not a great start. The cards represented just 30% of the plastic in circulation from the eight largest financial institutions as of June 30. Among consumers, 36% didn’t even know if they had a chip card and nearly half of chip-card users were confused the first time they used it. More than 60% thought the cashier didn’t know much about the process. Many large retailers are delaying new readers until mid-2016. One thing is certain – there is lots of confusion among consumers and retailers – and slower lines as a result.

The EMV Initiative

Called EMV (Europay Mastercard Visa), the entire credit card industry in the U.S. is moving to new chip based credit cards to better combat credit card fraud, which, according to Cybersource, has soared from 1.7 billion in 2011 to a staggering 7.1 billion in 2014.

For more information on EMV standards, visit

This EMV initiative is a major undertaking within the U.S. credit card payment industry, impacting any business that takes credit cards at their place of businesses (internet e-commerce not impacted), yet virtually nothing has been seen or heard in the media about this topic.

New credit cards to consumers have been “in the mail” over the past four months leading up to the October 1st deadline, but card issuers, as well as the media, have done a poor job communicating the initiative and what it means to businesses and consumers. Making matters even worse, the EMV initiative carries a significant “shift in liability” that will catch many businesses owners by surprise.

Keep reading for more info on this catch.

What businesses need to know – the technology transition to EMV

Business owners, bank ATM’s and even gas stations will need to upgrade their card reader equipment in order to accommodate the new cards.

  • Replace current credit card readers with a device that can read the new chip

Businesses can purchase (or lease) a new device, like those shown below, which will work in most settings. However, these will not provide any inventory, customer loyalty or analytics capabilities.

EMV readers

Some businesses have POS systems with integrated card readers, like a system shown below. Complying with EMV will require either upgrading that older system (if it’s feasible) or replacing the POS system.

A big plus for upgrading to new equipment now is that you’ll be ready for EMV, plus payment options like Apple Pay, and Mobile Wallets, which are quickly growing in popularity .

EMV - Older POS Systems cannot accommodate EMV

What if you don’t change equipment?

If businesses don’t swap out stand-alone readers or the POS system to accommodate EMV, older devices will continue to work. There’s just one catch — these businesses now become liable for all fraudulent charges made on non-chip readers.

  • If the credit card does not have a chip, the card issuer is liable

(that’s why card issuers are scrambling to get 600 million new cards out there before October 1)

  • If a business swipes using an old card reader, instead of a new EMV chip reader on these new cards, then your business is 100% liable for fraudulent transactions

EMV and Main Street

If you think it can’t happen to your business, envision these two scenarios:

  • Scenario A: An individual buys a meal, a handbag, clothes or electronics from your restaurant or store, then calls the credit card company and proclaims a “fraudulent charge” on their bill; The card issuer will credit the consumer, and charge your business
  • Scenario B: Same as above, but (organized crime gets involved and they target businesses on a much larger scale; They get the goods and credit, and your business pays for it.

In both of these cases, business using an older reader with a chip card would be fully liable for the charge because the business didn’t accept EMV.

Fraudulent charges have the potential to add up quickly. For example, if it happens 10X a week, at $50 per transaction — that’s $2,000 a month. Can your business afford to take this hit? (Click on image to enlarge)

EMV Liability

Merchant Consulting Group is helping clients plan and prepare for the EMV initiative to reduce risk to their business.

About Merchant Consulting Group

Merchant Consulting Group is a national company that is headquartered in Salem, Massachusetts. We provide fast and secure card processing on Apple, Microsoft, and Android devices, including smart phones, tablets, and laptops. Our highly competitive processing rates and no long term commitment has allowed us to become well respected by our employees, customers and partners. In addition to card processing, we excel in eCommerce, custom loyalty, cash advance, and ATM processing. We are registered directly with all major card brands (Visa, MasterCard, American Express and Discover), which allows us to provide customers with a direct processor relationship by cutting out any middlemen.