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Are You Responsible For Fraudulent Credit Card Charges?
Smart Credit Cards Are Coming
ICD-10 isn’t the only change that happened in October of 2015. Credit cards also implemented new technology in efforts to become more secure. New credit cards, often referred to as “smart” credit cards, are shifting to the EMV (Europay, MasterCard and Visa) standard. This means that they will have a computer chip integrated into the card. Legacy cards carry all of the card’s and card holder’s data on the familiar magnetic stripe and are easily counterfeited. Through the computer chip, EMV cards are able to generate transaction data at the moment of the transaction, making them much more difficult to counterfeit and steal information from. EMV cards are “dipped (i.e. slid into the new reader) rather than “swiped”.
Because of concerns about fraud and theft, much of Europe converted to the EMV standard several years ago. It took large breaches at places such as Target for banks in the United States to finally move forward with the upgrade. Still, banks are moving forward at a slow pace, first switching to cards that have both the chip and the magnetic stripe to give merchants an opportunity to catch up to the technology.
Those that accept credit cards (via a “swipe” system) will need new card readers to process the cards using the new “dipping” method. As of Oct. 1, the banks will be placing more responsibility for fraudulent charges on merchants if they haven’t adopted the new technology. In short, “the responsibility for card-present fraud will shift to whichever party is the least EMV-compliant in a fraudulent transaction.” In other words, if you don’t have the new card reader and someone uses a counterfeit EMV card to pay you, you will be responsible for the loss. In my experience, fortunately credit card fraud in our industry is incredibly low so this isn’t a reason to panic. It does make sense, however, to move to the new technology by October 1 to avoid any issues. Contact your current merchant services provider to determine what you will need to do to convert.
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Imagine going to your favorite restaurant or store one day and seeing a new two to three percent surcharge on your bill? When you ask, they inform you of a new policy that calls for passing credit card merchant fees on to the customer. How would you feel?
About the Author
Rob has been covering technology and business news for mental health professionals since 2011. His extensive experience in IT, business, and private practice allow him to synthesize information in a friendly, digestible manner. He also enjoys time with his family, ultimate frisbee, and board gaming.