EMV compliance has now been in place for just over 6 months. Adoption rate is still relatively low, even among major chains and box stores. It appears that some businesses are just not taking it that seriously. Major Point of Sale and hardware providers are still slow to release compliant equipment, and most processors were late to the game, if they have even arrived yet. The card associations are taking this adoption very seriously, and they are starting to play hardball.
Here are a few scenarios that have actually happened to customers of mine.
- The Late Adopter
- The Micros User
- The Mobile Merchant
The credit card associations are not messing around with EMV compliance. Initially, they claimed that merchants would only be liable for fraudulent transactions. An example of this would be if one of your cards were to get "skimmed" and recreated through forgery. This was the bill of goods that was fed to merchant service providers, and then to their customers and clients. What is actually happening is far from that scenario, and merchants that are not taking the proper precautions, are ultimately the one paying the price.
Turns out, merchants that are not EMV compliant are immediately losing disputes, regardless if the transaction was fraudulent or not.
Here are 3 examples of where this actually happened.
Instance #1: The Late Adopter
At Capital Bankcard South, we have been offering all of our customers free counter top terminals for years. There are some minimum requirements, but it is safe to say that more than 99% of our customers fit within our standards for the program. Part of the Free Terminal Program is the ability to "swap out" your terminal when there is a security standard update that is not able to be completed via download. EMV is an excellent example of this.
We have been notifying our customers since June 2015 about the upcoming EMV liability shift, and offering replacement terminals at no cost, shipping included. A large portion of our clients responded to the notifications, and submitted requests for their new terminals. Some did not.
Recently, a merchant who did not request a terminal called in regarding a charge back that he lost and was very upset. Apparently someone had come into his location and purchased several hundred dollars worth of fishing equipment, and paid by credit card. The merchant had the signed credit card receipt, and even an invoice with all of the customer's information on it, because one of the items was special order. The customer paid with a chip card, and my customer still had a non EMV terminal. The payment went through and the customer went on their way.
2 weeks later, my customer received a charge back from this customer, stating that he did not authorize the transaction. When the merchant tried to prove that he transaction was in fact authorized, they were informed that they would not be winning the charge back, due to non compliance. The merchant is not attempting to pursue legal action against the customer who filed the dispute.
The merchant updated their terminal immediately after this event occurred.
Instance #2: The Restaurant using Micros
Almost identical to the situation above, we have a very large restaurant that uses Micros for their Point of Sale system. As many of you are aware, Micros has yet to release a solution for EMV compliance. This merchant was hit 4 times in the same week, for over $1,000 in charge backs that they lost, because they were not compliant.
This outcome of this situation was a little different in this situation. They lost the charge backs, but we were able to reimburse the merchant for their charge backs, because of an arrangement we have with Micros.
Even though this situation was not a total loss, there was still a great deal of energy and effort used to resolve this situation.
This restaurant is in the process of upgrading their Point of Sale system to Clover.
Instance #3: The Mobile Merchant
More and more merchants are taking their show on the road and accepting credit cards outside of the office. A very high percentage of these merchants are still using the old card readers that are not EMV compliant.
These merchants are not immune to charge backs and are still under the scope of EMV. Many think that their processing volume is not enough to catch anyone's attention, and for that reason, upgrading is not high on their priority list. In my opinion, these are the merchants that have the most to lose. The businesses referenced earlier in this article were very large. They process tens, or hundreds of thousands of dollars per month. The charge backs were irritating, but they never put them into financial uncertainty. Many mobile merchants are small business owners, usually one or two man shows. These merchants certainly will feel the pinch if and when a charge back occurs and they cannot fight it.
For a limited time, we are upgrading all Square and PayPal users to our EMV compliant mobile solution free of charge. Not only is our customer service ranked much higher, but typically our rates are a little bit lower as well. This is a limited time promotion, so act quickly.
At the end of the day, if you aren't EMV compliant, you are risking more than you may realize. The barrier for adoption is very low, sometimes not at all. Merchants who have not adopted the technology need to realize that there is more at stake than just the inconvenience of swapping their terminals out. There are people who understand the rules of the system, and more and more we are seeing merchants who haven't adopted EMV being singled out. No one likes to work for free, or give away products at no cost. Do yourself and your business a favor, and get compliant ASAP.
We are always available to answer any questions you may have about EMV compliance and adoption.
