Changes for businesses in the works
Credit card issuers are continuing to roll out new cards designed to deter identity (ID) theft. That is good news for consumers who might otherwise be victimized by thieves stealing their personal information. However, the responsibility for losses resulting from ID theft has also shifted, resulting in changes for business entities of all shapes and sizes.
The new types of cards are called EMVs, short for Europay, MasterCard and Visa, three of the major credit card issuers. EMVs use new technology based on a computer chip, normally located in a small square on the front of the credit card. With this square, which replaces the long-used magnetic strip on the back of cards, a unique transaction code is created whenever the card is used. If an ID thief tries to use the information gained from your last credit card transaction, access will be denied.
These high-tech cards have been used successfully around the globe, notably in Europe and Canada, and already represent the majority of credit cards being used worldwide. In the United States, the first wave of cards contained both the square and the magnetic strip. Eventually, cards with magnetic strips will be phased out.
Although EMVs should not be viewed as a panacea, this is a positive step in improving ID theft protection. But consumers are not the only ones affected by the change. Naturally, businesses must make the necessary accommodations to accept the new cards. What’s more, the changes do not stop there.
Effective October 1, 2015, liability for a loss from credit card fraud has shifted from the credit card issuer to a noncompliant merchant at the point of sale. For instance, if your business does not comply with the new technology and sells goods to an ID thief, you are liable for payments erroneously charged to the consumer. This is a significant change.
Typically, a business will have to accommodate EMVs by installing new terminals at their purchase points. Many have already made the switch. For instance, if you run a restaurant or a hardware store with several cash registers, you will need a new terminal for each cash register. This is a relatively small cost to ensure greater protection against ID theft and liability to your company.
There is no legal requirement to make immediate changes to accommodate EMVs, but it is likely in your best interest to do so. This is an evolving situation, so stay on the alert for future developments.