Most small businesses aren’t ready for—and some don’t even know the basics about—an impending costly credit card liability shift.
Added security comes with a cost, and small businesses might not be prepared to pay the price.
On Oct. 1, merchants will be required to accept “chip” credit cards that aim to improve security, or the business will be responsible for fraud.
The updated credit cards, known as EMV (which stands for Europay, MasterCard and Visa), have small chips that communicate unique data with every transaction. The new credit cards require a certain payment terminal that business owners will have to install if they do not want to foot the bill for any fraudulent charges. That means the only way to be protected from financial liability for credit card fraud losses is to accept EMV cards.
Not only is this expensive, but small businesses just aren’t prepared for the shift, The San Diego Union-Tribune reported.
Smaller merchants have been slow to make the transition, according to new data from the Strawhecker Group consulting firm. Currently, only 4 percent of merchants with fewer than 20 employees have adopted EMV-compatible terminals—and a whopping 72 percent have no plan in place to deploy the technology by the liability shift date.
NFIB member Ann Kinner, owner of Seabreeze Books and Charts, is one of the few small business owners actually aware of the new regulation. “Unfortunately, for a lot of small businesses, they’re going to be rudely surprised,” she told the Union-Tribune. And even though she’s informed, Kinner says she’s still unprepared and doesn’t have the software to accept the chip cards.
Although all businesses are strongly encouraged to become EMV-compliant by the upcoming deadline, by the end of 2015, approximately only 70 percent of credit cards and 41 percent of debit cards in the U.S. will support EMV, Aite Group estimated.