What Your Small Business Needs to Know about the New Chip Cards

October 9, 2015 / Reading: 3 minutes

The rollout of the new chip-based credit cards is ushering in a new era of consumer protection for those in the United States. Businesses will soon need to adopt to this new standard and those who wait too long may end up seeing their business numbers drop.

Small businesses who aren’t compliant after the rollout will be liable for any fraud that occurs on their old credit card terminals

October is when banks and credit card companies have begun to officially start mailing out the new chip cards to their customers. Most will receive them in the mail unexpectedly and take a minute to realize that this new card will be replacing their old.

Ushering in New Security

Although they appear exactly the same physically, the new chip installed, called EMV (Europay, MasterCard, and Visa), is something that is a long-awaited upgrade for U.S. consumers. Most European countries have been using this technology for years, and Canada it has been a standard for at least three.

Credit card fraud protection has improved over the years, but this last piece to the puzzle will make it even harder for would-be thieves to access one’s account. This is because of the way the new chip cards create unique transaction ID’s for every purchase, making it impossible for the common criminal to access the private data associated with the account.

Don’t Get Left Behind

Because this is such a big deal for both the banks and consumers, small businesses who aren’t compliant after the rollout will be liable for any fraud that occurs on their old credit card terminals. This goes into effect by next week, with American Express dropping their liability coverage last on the 16th.

The new chip cards don’t bar consumers from using the old magnetic strips, though. For whatever reason, if small businesses need a little more time getting their terminals upgraded to accept the chip cards, they will still be operational. Just expect those who straggle behind the furthest will become the prime targets for criminals as the squeeze will be put on when it becomes harder to find their easy source of credit card info.

What the “Little Guys” will witness with EMV

As for small businesses who do business online, this changes nothing with how consumers do businesses online. EMV chips don’t provide any extra protection, nor do they require any changes from sellers. In fact, other countries who have made the switch to the new chip cards have experienced an influx of online credit card theft, as the overall identity theft came down.

What really ticks off small businesses who are being forced to upgrade their terminals in such haste is the fact that gas stations are exempt from this shift in liability (until 2017), as they have a full two years to swap their readers at the pumps.

Unfair and ludicrous may be the words that come to mind, although the excuse given is that the terminals at the pump are many times more expensive than those found at the registers. Mobile EMV chip scanners that plug into phones, the same as any POS scanner that small businesses can find, will not cost a premium either, so that is definitely a good temporary solution to consider.