Small businesses that don't adopt EMV technology face big risks, but there are barriers to adopting it.
Most shoppers have chip-and-PIN credit cards by now. But small businesses have been reluctant to embrace the technology that activates new fraud protections. A year after the change went into effect, what should you know about EMV technology?
1. Fraud down
The technology appears to be working. Visa reported that counterfeit fraud was down 35 percent in March 2016 compared with a year earlier at EMV-compliant locations.
RELATED: Infographic: How EMV Cards Will Affect Small Business
2. Adoption delay
Only 29 percent of U.S. merchants have activated EMV systems in place, according to the National Association of Convenience Stores. That means the majority of companies would be liable for consumer losses due to in-store transactions conducted with a counterfeit or stolen card.
3. Certification bottleneck
Card issuers test and certify EMV terminals before activating them. This process can take months, during which time businesses are still liable if a counterfeit card is used.
4. Chargebacks
Retailers without chip technology are charged for counterfeit transactions a chip would have thwarted—fees formerly absorbed by payment processors or banks. Visa forgives transactions under $25.
5. Potential Fees
Businesses can face penalties used to cover a credit card company’s investigation costs, says Jeffrey Novel, a small business litigator in Dallas.
Fraud Alert
Stores selling the following items are most vulnerable to counterfeit fraud, according to The Wall Street Journal:
- Electronics
- Clothing
- Liquor
- Tobacco
- Baby formula
- Jewelry
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