In early 2015, a rush of retailers started preparing for the October 2015, EMV liability shift. Device certifications, equipment acquisitions, training programs and implementation plans began flying about like confetti at a party. However, the early birds to the party realized the process of becoming EMV-ready can be cumbersome, costly, time-consuming and downright confusing.
EMV readiness for merchants means having chip-and-pin enabled devices ready for metal-chip embedded cards. The October 2015 shift leaves the entity with lesser technology liable for any cardholder disputes.
It’s no secret basic swipe-and-sign transactions are a large target for fraudulent activity simply because it’s easy. For the protection of all parties, it makes sense to have a system in place to protect businesses, banks, and consumers from wrong-doers.
Most merchants, however, are far from ready to handle chip-and-pin transactions and most consumers are unlikely to hold chip-enabled cards before the end of 2015.
So, is it really that big of a deal?
- The liability shift is estimated to total more than $10 billion.*
- EMV credit cards will account for 29% of total cards in circulation by the end of 2015.**
- The cost of switching to chip-and-pin devices can range from $200 - $1,000 per device.
- It takes an average of 8-12 weeks, including device purchase, company roll-out, and staff-training to become EMV-ready.
By most standards, $10 billion is a lot of money. The likely chain of events is that card issuers will be slapped with liability only a few times before they do a mass roll out of chip-embedded cards. Once that happens, any merchants without chip-and-pin devices will be left footing the bill for any disputes.
We’ve put together a few helpful tips to help you decide if it’s time for you to make the switch:
- You sell luxury goods or other, high-cost items.
If the goods you sell are protected behind lock-and-key glass displays or if you have a first-class security system in place, becoming EMV-ready is likely in your favor. Simply put, if your store has the lesser technology in a dispute scenario, you will be slapped with automatic liability. Automatic liability is not something you’ll want to contend with when a single sale can be worth several hundred or thousands of dollars. Jewelers and wireless retailers, we’re looking at you.
- Merchants in your industry have, or are starting the process of, making the switch.
Pay special attention to what other retailers are doing in your industry. Look online for industry trends related to EMV or reach out to your online community of business counterparts to find out whether making the switch is a top priority. If the general consensus proves EMV-readiness is vital, you can rest assured you won’t be the only merchant in your industry bearing the potentially high cost of making the switch.
- Your customer base is asking for chip-and-pin capabilities.
The statistics showing the majority of consumers being without chip-embedded cards may be misleading. If this is your main reservation, hitting the snooze button on EMV-readiness could end up biting you in the behind.
Once card issuers make the push, distribution to consumers takes very little time compared to the time it takes for a merchant to become EMV-ready.
- Your point-of-sale provider has clear, concise steps for making the switch and have offered a mass-purchase program.
Some merchants have decided to make the switch, only to find the devices compatible with their software are out of stock or on backorder. EMV certification is not only costly for merchants; software providers are scrambling to test and certify compatible devices and provide guidelines to reduce the stress on their clients. If your providers have specific, supported equipment and documented processes to help you make the switch, you are already one step ahead.
The conversation of EMV-readiness is not an easy one to have. There are mixed signals about the importance of the liability switch and its implications. Try not to get too caught up in the buzz you hear in your neighborhood. Instead, make the decision that’s right for you and your business.
The advisable solution for each business will depend on a very careful cost-benefit analysis.
We wish you luck on your journey through the maze that is EMV!