Understanding the EMV Fraud Liability Shift
As of October 1, merchants who accept in-store credit card payments became liable for fraudulent transactions—unless purchases are conducted using an EMV (Europay Mastercard Visa) reader for a chip-enabled card.
All major credit card brands have been issuing cards with EMV chips on the front and a magnetic stripe on the back for some time now. If your restaurant is presented with such a card and you choose to swipe it using the traditional magnetic swipe method, your business—not the card issuer or the bank—will be liable if the card turns out to be fraudulent.
Credit card purchases are a big deal in the foodservice industry, and EMV technology presents a big change you should understand. CreditCards.com reports that 64 percent of credit card holders and 36 percent of debit card holders make purchases at restaurants—a figure that’s likely to increase in the digital future.
Your business is under no obligation to switch to EMV technology. You just have to be willing to accept the risk of potential fraud losses. Updating to EMV card reader technology or switching to a new POS system could be expensive, possibly more expensive than the fraud you might encounter in a year’s time. But it’s important to remember that as of October 1, your business is responsible for covering fraudulent card purchases when you use the magnetic stripe readers to process a card with an EMV chip card.
EMV technology may be new to you, but it has been used in Europe and Canada for years, and is credited with reducing fraud dramatically. Since EMV implementation, the European Union has seen an 80 percent reduction in credit card fraud. In Canada, dollar losses due to card skimming declined 40 percent in one year.
Your customers are becoming more familiar with this new technology. Financial institutions have been issuing 5,000 EMV-chip cards a day since 2011, and there are now more than 3.5 million EMV-chip cards in use in the United States. Consumers also are encountering the card readers at cashier stations in many other businesses.
This means you have another factor to consider—image. You’re proud of serving on-trend food and satisfying customer cravings. EMV technology may soon be something customers look for or even expect. And with good reason: credit card fraud affects them, too. Unchecked fraud results in higher prices for goods and services, steeper credit card interest rates, and data theft that can be a crushing blow to peace of mind.
All major credit card companies are moving away from the magnetic stripe cards to the EMV-chip cards, so it makes sense for your business to switch when the time is right. Gordon Food Service is ready to work with you, help you understand this new technology, its costs, and solutions that are best for your business. Your Customer Development Specialist can show you the Gordon Food Service suite of Catalyst business solutions, including Vantiv and Toast, to address EMV technology upgrade needs.
EMV is coming. Watch this short video from Vantiv to learn more.