The clock is counting down, loudly now, with the EMV liability shift less than one month away.
It is a deadline lots of business will be missing, especially small ones.
As of Oct. 1, merchants still using the mag stripe-based cards most American consumers know and love will be liable for card fraud going forward should they physically accept a counterfeit card.
Those fraudulent cards are behind some serious losses. By Aite Group estimates, $3.6 billion will go out the door on fake cards this year, up from about $1.7 billion in 2011.
Part of the issue is the expense of changing card readers, though The Wall Street Journal noted that card readers can be had for less than $100 a pop and many vendors are offering savings as the deadline draws near.
And yet merchants aren’t feeling the love, either because they don’t know the shift is coming or because they know but don’t see any particularly compelling upsides on offer with EMV. Almost two-thirds of businesses with fewer than 500 employees note being unready for the switch, as opposed to 44 percent of large merchants that claim they are.
“I have not taken a charge back in 15 years,” said Valerie Koehler, owner of Blue Willow Bookshop in Houston, whose average transaction is $30 to $50. “I am more likely to take a bad $100 bill, just because the staff wasn’t paying close enough attention.”
Lack of need seems to be a recurring theme among smaller merchants as to why they are not making the shift.
“Something as small as a $10 gift card can be very easily monetized,” said Patty Walters, a senior vice president with payments processor Vantiv Inc. “A $500 spa gift certificate, not so much.”
Plus, some merchants are not signing on in protest, specifically of what they consider dishonest tactics used to sell them EMV.
BBQ joint owner Shelli Warren complained that she was railroaded into a new card processor because she was told the shift was legally mandatory.
“He had me in fear that that day or the next day I wouldn’t be able to run a credit card because of the smart chip,” said Warren, who added that she is currently paying about $42 a month for the equipment.
And, it is worth noting, that while EMV fights card fraud, it does little to stop online fraud. In the U.K. when EMV was introduced, counterfeit fraud did drop, but online fraud spiked. Tokenization is the currently favored method for fighting fraud online.
“There are now more solutions to identify and detect online fraud,” said Stephanie Ericksen, a vice president with Visa Inc.