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Small businesses slow in converting to EMV card readers

Summary

With a year to go before a key deadline, many merchants are slow to switch to EMV card readers. Those that don’t will find themselves suddenly liable for card-related fraud

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With a year to go before retailers hit a major deadline for upgrading their credit card machines at the

“It’s all about the consumer experience,” Armstrong-Fowler says. “Our brides, they have enough on their plate. The last thing they want to think about is their credit card getting hacked.”

There are minor changes afoot for cardholders, too. They will likely be receiving new cards in the mail — ones with EMV chips. The cards will still work at stores that do not have EMV card-readers. But if consumers use a chip card at an EMV terminal, they will have to become accustomed to inserting it, not swiping it, and in some cases they might have to enter a PIN.

Weighing the risks
Small businesses might be lagging because they don’t see a need. While major retailers such as Walmart and Target have EMV terminals in place, smaller retailers might not see the payoff in installing the new equipment because they don’t perceive that they have problems with fraud.

“When they say, ‘It won’t happen to me,’ part of our job is to educate them that they’re not different from anybody else,” says Steve Mathison, vice president of payment acceptance with payment processor First Data.

There are tangible benefits to being an early adopter and having that behind you and knowing it’s done, but there are also material risks to being late.

— Steve Mathison
First Data

Another issue for small businesses is that as larger companies make customer payments more secure, fraudsters that usually scam mega-retailers could migrate to the smaller merchants whose systems remain more vulnerable.

“There are tangible benefits to being an early adopter and having that behind you and knowing it’s done, but there are also material risks to being late,” he says.

By the end of 2014, an estimated 5 million of the 12 million U.S. credit card terminals will be EMV-compatible, according to the EMV Migration Forum.

Forum director Randy Vanderhoof says he knows there will be plenty of businesses that won’t make the switch by October 2015 — probably smaller companies that plan just to wait until their existing card readers stop working or become obsolete.

And maybe for some retailers, he says, that’s a risk that’s worth taking.

“If you’re the bait shop in Spearfish, Iowa, and you get the same 100 or 150 customers a year buying bait, the likelihood that you’ll see a significant increase in fraud because of not accepting chip cards isn’t that great,” he says. “The more you have knowledge of your customer base, the lower the value of the average ticket item is, the less likely it is you’ll be the place fraudsters go to commit counterfeit card fraud.”

See related:8 FAQs about the new EMV credit cards, How soon should retailers switch to EMV?, How can I protect my point-of-sale system against security breaches?

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