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EMV Deadline Is Today: What to Do If You Don’t Have an EMV Terminal Yet

Oct. 1, 2015
Small Business
EMV Deadline Is Today: What to do if You Don’t Have an EMV Terminal Yet
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The so-called EMV deadline is here, but if your business hasn’t switched to an EMV terminal yet, it’s not too late.

The U.S. is making the switch from credit cards with magnetic stripes to EMV-chip credit cards (also known as chip-and-pin or chip-and-signature). But October is just the beginning of a nationwide transition to the chip-enabled  cards, which are more secure than cards with magnetic stripes — though not totally fraud-proof. (Read more on why you don’t need to freak out about the EMV deadline.)

“The move to EMV will be gradual, not a stampede,” says Deborah Baxley, principal of cards and payments at Capgemini Financial Services.

Now that the October liability shift has happened, your business is expected to accept customers’ EMV cards or eat the loss for counterfeit charges. But various studies have shown that most small-business owners aren’t prepared to accept EMV chip cards. The latest, by Capital One, found that only 43% of business owners were even familiar with EMV, which stands for Europay, MasterCard and Visa, the companies that created the technology. Of those, just 34% were actually equipped to accept chip cards.

If you don’t have an EMV-enabled terminal, here’s what to do.

Examine your risks

Although Oct. 1 has been deemed the “EMV deadline,” there’s no mandate that you have to upgrade your point-of-sale system to accept EMV cards. It’s up to each business owner to decide whether to upgrade. If you choose not to, you just have to be willing to pay up if a customer uses a counterfeit card. If you have an EMV terminal but a customer doesn’t have an EMV card, the customer’s bank or card issuer has to recoup the loss. Before the October liability shift, banks and card issuers typically covered all counterfeit charges.

Some businesses, such as jewelers and electronics retailers, should strongly consider upgrading because the nature of their businesses increases the likelihood of fraud. Businesses with smaller-ticket items and services — coffee shops and dry cleaners, for example — are less likely to get hit with counterfeit fraud so could stand to wait before upgrading. (Here’s more on what retailers need to know about EMV, risk and security.)

Shop for a new POS system that enables EMV transactions

If you want to accept EMV cards, you’ll probably have to upgrade your POS system. It can be as inexpensive as buying a simple EMV reader — Square offers one for $29, for example — or it can cost you several hundred dollars for a more robust system.

You may be able to stick with your current POS system provider; many providers launched new EMV terminals before today’s deadline. If your current POS system provider doesn’t offer a way to accept EMV cards, it’s time to look for one that does. Luckily, there’s no shortage of options — compare POS systems here by EMV compliance, cost and features.

While you’re at it, consider upgrading to a terminal that enables both EMV and NFC technology, as you’ll kill two birds with one stone. NFC technology powers mobile wallets such as Apple Pay, Samsung Pay and Android Pay, which more consumers are using.

The bottom line

The fact that the Oct. 1 EMV deadline has come and gone doesn’t mean EMV adoption will be instant. Based on how EMV implementation has gone in other countries, it will likely take two to three years before 60% to 70% of transactions use EMV chip cards and EMV terminals, according to a Visa fact sheet. In the meantime, evaluate your business’ risk for counterfeit fraud. If you decide to upgrade your POS system to enable EMV, talk to your current POS provider or compare your options with a new provider.

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For related information, visit NerdWallet’s resources on how to start a business. For free, personalized answers to questions about starting and financing your business, visit the Small Business section of NerdWallet’s Ask an Advisor page.

Teddy Nykiel is a staff writer at NerdWallet, a personal finance website. Email: [email protected]. Twitter: @teddynykiel.

Image via iStock.