If You’re Not Ready for the October SmartCard Shift, Read This Now


small business-smartcards-octoberDid you know that the credit cards you use every day will be changing completely? By October, all cards in the U.S. will go from swipe or “chip with signature” formats to a “chip with PIN,” to increase security and cut down on fraud.

What are SmartCards?

Right now, U.S. customers mainly pay with swipe cards. The card’s magnetic strip swipes through your machine, connecting the payer’s card to a payment processor, so you get money for the transaction. Afterwards, the customer signs a printed (or on-screen) receipt.

In the new chip-and-PIN cards, the card is dipped, but instead of a signature, the deal is authenticated by a unique PIN that validates the card’s user—a more secure link than a signature.

It’s much harder to steal data from a chip, and nearly impossible to copy and reuse card information that is stolen. Which means less credit card fraud. Plus, chip-based cards are intended to pave the way for a mobile-based payment infrastructure in the future.

What this Means for You

The new cards bring a new rule: credit card companies are no longer responsible for fraudulent charges associated with counterfeit credit cards — rather, any business that has not upgraded will be liable. So by October 1, you want to be set up with a chip-based credit-card system—unless you want your business to assume the risk of fraudulent transactions. (Note: Under most cards’ policies, the liability shift won’t happen until fall 2017 for pay-at-the-pump gas station transactions.)

Though this is a big change, it’s not new territory. Outside of the U.S., nearly half of all cards are EMV-enabled, as are there-quarters of all terminals, according to Visa.

Still not convinced? You can read about the technology, the timeline, and the consequences of not adopting the cards in this helpful document the SmartCard Alliance put together.

What Your Business Needs to Do

Long story short, you’re going to have to change your credit card system to use new PIN-enabled processors and updated software.

How to Upgrade

  • You’ll need a card-reader terminal that accepts chip-based cards and new software that sends the charge through to your payment processor. This can start at $100 for the terminal and head into the thousands of dollars for the software.
  • You’ll have to learn your way around the system, then train your employees. During the transition period, customers may want to pay with the old swipe cards, newer chip-and-signature cards, or the newest chip-and-pin cards, and you’ll have to know how to deal with each. Set aside time for testing as soon as you can, and create a budget for the process.

If you’re purchasing new equipment, do your research before you upgrade. You may be able to invest in forward-looking terminals that will adapt to changes in the near future, like accepting mobile payments or plugging into new loyalty or gift card software.

Accept Free Help

The change has been in the works for nearly four years. During that time, credit card brands, payment processors, and terminal makers have gained experience in implementation and support (global brands also have know-how from processing payments abroad).

Call the support lines of the credit cards you accept, and don’t be shy about asking for set-up help when you purchase the terminals.

Or, Seek out a Tech Consultant

Choosing the right set-up is important for your company, since you’re investing in equipment that you’ll use for years. If you don’t have time to learn it all on your own, it’s worth looking for someone who can outfit your business exactly right. An experienced consultant should be able to get you set up in less than 10 hours.

What to Look Out For

Will the new cards eliminate all fraud from your business? Unfortunately, not entirely. Though the chip-and-pin cards reduce information theft, they don’t eliminate it. Over the years, thieves have managed to hack into the cards by harvesting PINs  or manipulating currency conversion calculations.

Still, in the UK, credit card fraud decreased by 80 percent from 2007 to 2014, according to McGladrey, a business consulting firm. In Canada, the implementation of chip-and-PIN reduced debit card fraud by 50 percent from 2009 to 2011, according to Interac, a debit card system company.

The move to chip cards will save your small business money in the long run by securing your transactions. While you may not have had to pay for fraud in the past, your business may still have suffered because of lost customer trust.

Remember, the reason your business accepts cards to begin with is to help you sell more products, a good thing to remember as you navigate the implementation.

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