Guillermo Barajas, OBDC’s Intern – Impact Evaluation is back as our contributing blogger this week.
Next month, the new technology coming into our debit and credit cards (it’s called EMV) is taking place. There are still questions about the technology, regulations, and timeline. We’re here to answer a few.
Firstly, EMV is a microchip, developed by Europay, Master Card, and Visa (E-M-V). It is embedded in the new cards and offers greater protection from fraud than old magnetic strip cards because it is harder to replicate. It’s a technology that has been in use in Europe for the last decade and requires users to dip the card into a special pocket instead of swiping them. These new EMV cards are currently being shipped to card holders but still have the magnetic strip in the back still making them compatible with old card scanning machines. Once a majority of Americans have EMV cards, the plan is to stop creating cards with the magnetic strip and require business owners to provide card scanning devices that only read EMV.
The new devices are the bone of contention between the credit card companies and small businesses. The new devices start at $150 and may require an upgraded computer software system to complete the transaction. Some small business owners argue that all this new infrastructure is a big burden. Coupled with the October 1st deadline set by the credit card industry, many small business owners feel pinched.
After October 1, credit card companies will no longer bear the responsibility for purchases made by magnetic strip fraud at businesses that have not upgraded to the new EMV system. That leaves small business owners to pick up the check. Magnetic strip fraud is not as rampant today and no longer makes up a majority of credit card fraud because fraudsters have moved only. However, this still may create challenges for some businesses.
It will very likely take years for the process to smooth out, and it is usually best to research early and create a plan for your particular business to deal with the potential hurdles that arise. OBDC has business consulting services to support our clients on this issue or any other issue facing your small business. Schedule your free, one-on-one appointment today by calling 510-830-3202 or email firstname.lastname@example.org.