Five EMV Myths: Are You Ready for the Liability Shift?

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Five EMV Myths: Are You Ready for the Liability Shift?

By Henry Helgeson, CEO and Co-Founder, Cayan - 10/01/2015
Odds are you've at least heard rumblings about the October 2015 liability shift, which will hold all U.S. merchants using non-EMV-compliant technology responsible for certain types of fraudulent transactions made with a chip card. Maybe your business is already aware of the importance of upgrading your point of sale terminals in time.

Still, no matter your level of EMV knowledge (or stage in the adoption process), there are several common myths and misconceptions floating around the industry. As the payments world approaches this long-awaited benchmark, it's important for retailers to separate fact from fiction to better inform employees and better serve customers. Here are some of the most common myths surrounding the October 2015 EMV liability shift:

Myth 1: EMV isn't going to happen.
Major credit card providers including MasterCard, Visa, American Express and Discover are committed to the October 2015 deadline. Thanks to their part in the EMV rollout, approximately 50 percent of all cards in the U.S. will be chip-enabled by the end of 2015.

Think things are happening too fast? The United States actually is one of the last countries to adopt EMV, which could explain why it's home to 47 percent of global fraud, but only 23 percent of overall transactions, according to a recent Nilson Report. While merchants may want more time to prepare, the only way to steer clear of fraud liability post-deadline is to follow the lead of major card brands and upgrade terminals and POS equipment accordingly. If you're tempted to demand more time, think again. Attempts have already been made and card providers don't plan on pushing back the deadline.

Myth 2: Only large merchants need EMV-compliant technology.
Many small business owners are under the impression that the EMV liability shift will only affect large merchants. The reality is all businesses, regardless of size, will be held responsible in the event of fraud if they haven't upgraded their payment terminals. Whether you run a Fortune 500 company or a local mom-and-pop shop, the risks of putting off EMV compliance are the same.

This misunderstanding is a dangerous one for small businesses. Our recent survey of small businesses showed that over half of respondents won't be EMV-ready by Oct. 1 and another 37 percent don't plan to upgrade even after the deadline. Additionally, a study by Hospitality Technology and Vertical Systems Reseller reports that one in four restaurants and forty percent of retailers will not have an EMV roadmap in place by the end of the year.

Small business misconceptions go beyond liability. Many SMBs aren't aware of their own fraud risk level and think they can fly under the radar. The truth is, small businesses are equally as susceptible to fraud as larger merchants. In fact, the National Small Business Association's technology survey found that almost half of respondents had been targeted by hackers. While large businesses often make headlines when hacked, many small businesses suffer behind the scenes. Being EMV-ready isn't just about liability. It's about keeping customers safe, which should be a priority no matter how big your business is.

Myth 3: Technology upgrades are expensive and not worth it.
The estimated cost to upgrade terminals ranges from $150 to $1,000. If that seems like a steep fee, keep in mind that the financial consequences associated with not upgrading to EMV-compliant POS technology can easily outweigh the cost of upgrades. A recent report by Javelin Strategy and Research estimates that the United States will invest approximately $8 billion in order to fully meet EMV standards. Comparatively, fraudulent credit card activity costs the nation between $9 and $10 billion each year.

Additionally, as EMV standards take hold, customers will begin to expect these security standards. Businesses that aren't ready could encounter some skeptical shoppers down the road when dipping cards becomes second nature.

Myth 4: EMV is just a stepping stone to other technology.
Payment processing technology is constantly evolving as industry experts continue to search for new and better ways to secure transaction data. While EMV may be one stop on a long journey to payment security, it's an important and necessary milestone.

In the mean time, holding out for the next big thing puts merchants at risk. Plus, there are other benefits to upgrading terminals beyond EMV-compliance. NFC-equipped EMV terminals can also accept mobile payments, so choosing a payment system with both of these technologies is a great way for businesses to get ahead.

Here's some extra incentive to embrace mobile alongside EMV: "Tap to pay" platforms like Apple Pay (and the buzzed-about, soon-to-arrive Android Pay) are growing in popularity. According to a recent report from Deloitte, in-store mobile payment usage will increase by 100 times by the end of 2015. If the benefits of EMV aren't enough to inspire an equipment upgrade, consider making the shift for the sake of accepting mobile payments so customers can choose to pay with whichever method they prefer. It's a win-win!

Myth 5: All it takes to be EMV ready is upgraded equipment.
While upgrading terminals to be EMV-compliant is extremely important when preparing for the October 2015 liability shift, it's not the only step businesses need to take to be ready. It's also important to train your employees on the new technology and what it means for customers. Training for sales associates should cover how to recognize chip cards and how to instruct customers through the payment process (chip cards are typically inserted into a slot at the bottom of the machine and only get removed after the transaction is complete; very different than your standard swipe).

Additionally, processing EMV transactions takes a few seconds longer than purchases made with a magnetic stripe. Make sure your cashiers are aware of this subtle difference and can answer customer questions regarding the new process.

As the October 2015 liability shift rapidly approaches, it will be important to make sure you have all the information you need for a smooth transition to EMV. Don't be fooled by these myths. EMV is happening and it's happening soon, so leave the false information behind along with those magnetic-stripe cards.


Henry Helgeson is CEO and Co-Founder of Cayan, a payments technology company.