Received your new credit card yet? The one with the chip embedded in it? If you haven't, you will. Credit card companies are sending them out this year, and these new cards will have a big impact on how people pay for items in stores, which means an even bigger impact on merchants. Is your small business prepared? You'll need to be. Here are five things you can do—right now—to make sure your business is ready.
1. Understand the new cards.
The chips embedded on the new credit cards are commonly referred to as EMV. They hold encrypted information about the cardholder and the transaction. The information is created and stored in such a way that transactions using the card with EMV point-of-sale terminals are more secure than before. With EMV chip cards, counterfeit fraud is managed at the point-of-sale through the embedded chip on the card, which is used to validate that the card is authentic. As opposed to "swiping" their cards, your customers will be “dipping" the card by inserting it into your point-of-sale terminal (see #3 below). You need to know how it all works so you can explain the system to your customers as well as your employees.
2. Understand your liability.
EMV cards have been used around the world now for years, but the U.S. has been slower to adopt the technology. This is partly for technical reasons, such as the complexity of the payment processing system, the number of players and the overall size of the marketplace. But after seeing the results of reducing fraud around the world, the credit card industry is strongly encouraging merchants to take steps to accept these new cards. How? Starting in October 2015, if you haven’t upgraded your point-of-sale systems to accept EMV cards and there's fraud, you could be held liable. That's a big change from the current policy where fraudulent transactions are generally covered by the credit-card issuer.
3. Buy new equipment.
In order to accept EMV cards, you will need to make sure you have the right point-of-sale terminal. If not, you will need to upgrade or buy new equipment. A typical point-of-sale card reader that is EMV-enabled can cost anywhere from $50 to $250 or more, depending on the bells and whistles you want on it. This is a cost to your business and will need to be budgeted.
For example, American Express launched its Small Merchant EMV Assistance Program in February to help offset the costs of upgrading. U.S. small merchants that have upgraded to an EMV terminal can apply for a one-time $100 reimbursement, provided in the form of an American Express gift card, through April 30, 2015. To qualify for a reimbursement, a U.S. small merchant must have less than $3 million in annual American Express charge volume. Other terms and conditions apply. More information is available at www.americanexpress.com/fightfraud.
4. Educate your employees—and customers.
Using the new devices isn't that hard, but both your customers and employees will still need to learn how. When it's time for a sale or a diner asks for the check, the amount is entered either manually by the server or automatically from the cash register. The customer is asked to approve the amount and given the opportunity to enter a tip or even answer questions, like requesting an email receipt or being added to your database. (If you run a restaurant, your server will likely be doing this with a wireless point-of-sale reader at the customer's table.) The customer then inserts the card into the reader and holds it there for a few seconds. Approval is made, a receipt prints out and a signature is recorded. Someday, this will be second nature to us all. But for now, your people will need to be trained on how to use these devices so they can also instruct your customers. This will take time, so it's a good idea to start now.
5. Grow your business.
This is a marketing opportunity for you. The sooner that you're ready to accept EMV cards, the more you can talk about it with your customers. The point-of-sale terminals are available now. Put signs up on your walls letting customers know you accept EMV cards. Go mobile and use the opportunity to turn all of your point-of-sale equipment into tablet-based software so that your employees can get out from behind the counter and provide a more interactive, personal and faster transaction for your customers—who will love you more for the convenience.
EMV is reality and will impact your business. Are you ready? Now is the time.