by Debi Enders
New rules that take effect Oct.1 may shift financial liability to your business for fraud costs associated with the use of counterfeit, lost or stolen “smart” credit cards. The new rules are the result of a shift by credit card companies to chip-based cards that are easier for businesses to authenticate and very difficult for criminals to copy. These smart cards, also known as EMV after the three companies that worked together to create them – Europay, MasterCard and Visa –contain a tiny computer chip that merchants with chip-enabled payment terminals can read to authenticate the card and the cardholder when a PIN or signature is required. They replace cards that rely on less secure magnetic strip technology. If your business hasn’t made the switch to EMV technology, there are many good reasons for making sure you do so by Oct. 1. Here are three of the biggest:
1. You’ll lower the risk of card fraud. One reason credit card fraud has been so prevalent in the United States is that the country has delayed implementing smart credit card technology.
2. You’ll reduce your own financial liability. Historically, the bank that issues a card has been held financially responsible for any losses that occur when a counterfeit, lost or stolen card is fraudulently used in a transaction. The new chip-based cards, however, make it much easier to stop potential fraud in its tracks.
3. You may be able to expand your payment options. The switch to EMV technology offers additional value to you and any customers who are interested in making purchases using mobile payment technologies like Apple Pay, Samsung Pay and Android Pay.
The bottom line: The cost of an upgrade may be a small price to pay compared with the financial consequences of fraudulent transactions processed using magnetic strip technology. And it just may give you an advantage with customers who are looking ahead to the future of payment technology.
Debi Enders (debi.enders@commercebank.com) is assistant vice president, small business banking at Commerce Bank.
Submitted 9 years 82 days ago