Archive: Business & Technology

Buffalo, NY — Credit card transactions are changing. As of October 1st, businesses without a Europay, MasterCard and Visa (EMV) processing device, or chip card payment processing, could face an unexpected financial burden. Better Business Bureau of Upstate New York urges all businesses that accept credit cards as a form of payment to act quickly if haven't done so already.

Next week, American Express, Discover, MasterCard and Visa will no longer accept liability for fraudulent credit card charges. Instead, that responsibility will fall with either banks or businesses — whichever party is the least compliant. Many big retailers switched credit card terminals to reduce the risk of fraud. Many credit card companies and banks have been issuing the chip credit cards for the past several months. BBB and experts confirm that many small and independent businesses remain exposed, which could result in thousands of dollars in penalties. A recent survey conducted by Wells Fargo and Gallup found that 49 percent of small business owners in the U.S were unaware of the pending liability shift.

"Businesses that are looking for solutions are advised to start with trust in finding the right device or payment processing partner," said Warren Clark, president of BBB of Upstate New York. "The investment a business needs to make for new EMV processing will be relatively small compared to the shock of now being responsible for fraudulent charges."

EMV readers run from under $25 for a basic device to about $300. The devices are available from major electronics retailers and online. In addition to the card reader, the point of sale (POS) system needs to be compatible as well. Experts say newer POS systems should be fine, but older systems may not work with the chip card reader. Credit card processing companies may be able to provide a business with additional information or recommendations.

When the card is used, a code is generated to identify that specific transaction. Even if the card data and the one-time code are stolen, the card would be declined because the code was already used. Instead of swiping their card, people will now insert the card (chip first) in in a slot or tap it on a reader. It may take a few moments longer than the old swipe card, but the transaction will be more secure.

The chip cards will eventually replace magnetic stripe cards completely. Worldwide, there are 2.37 billion chip credit and debit cards in use. Eighty countries are now using this technology. The United States is catching up; by the end of 2015, 70 percent of credit cards and 40 percent of debit cards in the U.S. will have chips. Many banks, credit card companies and credit unions are already issuing chip cards to current account holders.

2014 fraud facts*:

• $32 billion - annual cost of fraudulent purchases in the U.S.
• 38 percent - increase in annual fraud costs from 2013 to 2014
• $3.08 - amount all retailers paid per fraudulent dollar
• $3.34 - amount mobile-channel merchants paid per fraud dollar
• 47 percent - amount of credit card fraud that affects U.S. consumers
• 24 percent - amount of total card volume that occurs in U.S.

*Sources: LexisNexis "True Cost of Fraud" 2014 study; Wells Fargo/Gallup Small Business Index; Barclays "Security in Payments: A Look into Fraud, Fraud Prevention & the Future"

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