Video: Small-merchant guide to EMV credit cards


Small businesses have been slow to upgrade to terminals that can read EMV chip cards. Here’s what they need to know about making the switch

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Business should start preparing for a new kind of credit card that’s hitting the market. It has a chip embedded in it as well as a magnetic stripe on the back — as opposed to the cards we see now with just the magnetic stripe. This chip is supposed to make the card impossible to counterfeit.

The only hitch is, a business needs the right kind of card reader for the chip to work. And with a new liability shift, if a fraudster takes advantage of a business using a counterfeit card and they don’t have the right kind of reader to detect it, that business owner will now have to take the hit.

They’re called EMV cards, or chip-and-signature cards and every time one is used for payment, the chip creates a unique transaction code that cannot be reused. So even if a thief is able to intercept information during a transaction, it’s useless for future transactions.

To better understand how businesses are dealing with the pressure to become EMV compliant, we went to small merchants to find out what’s motivating them … or holding them back when it comes to upgrading.

Cipi Ilai has owned her Austin gift shop for almost 30 years.

While she knows she needs to update her payment terminal to keep up with the times, the shift in fraud liability hasn’t played a role in her decision on whether to invest in the new technology.

“I didn’t hear about this,” says Ilai, owner of AustiNuts. “What do you mean after the deadline, if there is fraud?”

Though information has been out there warning merchants they will soon be liable for fraudulent charges if they are not EMV-compliant, we found many small-business owners are — like Ilai — unaware of the shift.

What they have heard is the promise of lower swipe fees if they change their systems to accept chip cards. And, as every dollar counts for Ilai’s shop, she’s ready to get on board — but she wants to do her homework first. “I want to know how much it will cost me,” she says. “Who shall supply me the best service and the best price?”

Alejandra Junco, owner of Bee Cave Acupuncture in Austin, has already made her investment in an EMV card reader in hopes of saving money in the long run. With only one payment terminal, she says the installation was as easy as getting Wi-Fi. A bank representative came to her office and in a few minutes she was chip ready.

Junco decided to lease the reader instead of purchasing it outright. Between the lease and service fees, she is paying about $30 more per month than she was before. However, that could be offset by a lower transaction fee every time a customer pays with a chip card.

Junco is telling her staff: “If [customers] have a chip please insert it instead of swiping it because it’s better for us.”

But, not all business owners are as plugged in as Junco, who belongs to the Austin Hispanic Chamber of Commerce, an organization that has worked to educate its members about the chip technology.

An April 2015 study by Intuit showed 48 percent of small businesses were not aware of the requirement to switch to EMV solutions. And only 42 percent were committed to the migration.

Some business owners might be waiting to upgrade because of the cost, which can be high depending on how integrated and complex their payments systems are. But, experts recommend each business owner look at their own vulnerability. For instance, a store that sells high end goods, like electronics, that can easily be resold on the black market is more vulnerable to counterfeiters than a laundromat or a coffee shop.

Precision Camera and Video is exactly the kind of business that thieves target, and it’s dealt with fraud in the past. Already outfitted with the chip-card readers, they aren’t taking any chances of having to pay for those fraudulent transactions.

“If they come in here with a chip card and we don’t run it properly, then the liability shifts to us,” says Jana Kamp, controller for Precision Camera & Video.

But Kamp is quick to point out that becoming compliant requires an investment of money, and time.

“It’s an expense for sure for businesses that are going to change over to this technology. The machines are not cheap by any means and it’s a matter of training your staff,” she says.

Small-business owners will need to weigh those expenses against the potential cost of fraud, and then decide if it’s time to check out the chip.

See related: EMV holdouts: Why merchants are slow to make chip-card switch, 8 FAQs about EMV credit cards, Preparing your business for EMV migration

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The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.

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