House Small Business Committee Hears Testimony On EMV Technology Switch

Date: October 09, 2015

Retailers, Legislators Debate Merits Of Chip-Enabled Card Technology

This week, the House Small Business Committee heard testimony on chip-enabled credit and debit card technology. USA Today reports that on Wednesday, the National Retail Federation told the House Small Businesses Committee that the introduction of chip-embedded credit and debit cards are going to cost about $30-35 billion, a significant cost to banks, but because they are signature-based and not PIN-based, they will do little to help consumers. The EMV technology “does not stop breaches,” said NRF senior VP for government relations, David French, in a statement submitted to the Committee. “It is merely an additional expense small businesses are being told to bear.” The testimony followed the Oct. 1 deadline marking a shift in liability that now makes small businesses responsible for any fraudulent transactions made with chip-enabled cards that they don’t have the technology to process. The new cards are designed to be more secure than those with simple magnetic strips because during each transaction “a unique code” is generated, making counterfeiting more difficult, USA Today reported. Though an NFIB survey issued this week showed many small businesses currently don’t have chip-enabled card technology, USA Today reported that “Visa has said that there has been significant progress, with more than 314,000 merchant locations in the U.S. enabled to process chip cards as of Sept. 15.”

What This Means For Small Businesses

During the hearing, committee members were critical of the switch to EMV, The Hill reported. Chairman Steve Chabot (R-OH) stressed that the transition that culminated in the Oct. 1 deadline was “motivated by the private sector, not by any government regulation,” and said that small businesses that are worried about implementing the technology or companies that have not issued new cards pose “significant challenges to sorting out liability issues in the case of cyber theft.” Ranking Democrat Nydia Velazquez (D-NY), said that EMV is a “step in the right direction,” but that “lack of awareness in the small business community, high costs to upgrade and disagreements over verification methods” are barriers to implementation. These comments get to the heart of the issues small businesses face with the transition to chip-enabled technology, along with the high costs associated with replacing card-reading technology. Small businesses should be encouraged that some lawmakers recognize the difficulties facing business owners during this transition.

Additional Reading

American Banker and the AP also covered the hearing.

Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.

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