October 1 is the deadline of the liability shift concerning EMV chip card technology in the United States. Unlike before, businesses that are not supporting EMV (short for Europay, MasterCard and Visa) cards will now bear responsibility for any fraud done in their store once the Liability Shift is fully implemented.

Although some big brands can now boast of their EMV compliance, smaller businesses are still struggling to meet the deadline. Here are some of the major reasons why small to medium-sized businesses (SMEs) are trailing off.

Imonggo EMV

Expensive Cost

According to Javelin Strategy & Research, it will take an estimated cost of $8.65 billion to replace the existing 1.14 billion point of sale (POS) devices, ATMs, and credit or debit cards nationwide.

Major businesses are willing to take the leap and invest on EMV. For instance, Target, the second largest retailing company in the U.S., spent $100 million to upgrade its hardware and software to meet the terms of EMV chip card technology. With this upgrade, Target still needs to issue new chip cards to replace its old cards — an action that is expected to be done next year.

A big player like Target may well afford the cost, but what about SMEs? With their limited budget and lack of resources, SMEs are toiling over the EMV problem.

Time Constraint

With barely a month to go before the cut-off date, Javelin Strategy & Research released a report announcing that 75% of merchants will miss the deadline. “The smaller merchants are clearly not ready, not by a long shot,” said Nick Holland, Javelin’s payments director.

As may be expected, businesses are asking the credit union for an extension. The Food Marketing Institute (FMI), which represents supermarket chains and other food retailers, sent a letter to the big credit card companies, saying, “Regardless of how strong the commitment or how many dollars invested, the reality is that the system will not be ready to meet the card networks arbitrarily-set mandate for the liability shift in October 2015.”

Credit card companies gave businesses four years to prepare for the Liability Shift, but that just doesn’t seem to be enough. The greater population of merchants are still not EMV-equipped.

Problem with Payment Gateways

EMV compliance is not as simple as installing EMV-enabled devices. Merchants also need to ensure that their payment gateways are EMV-compliant.

Credit card companies gave businesses four years to prepare for the Liability Shift, but that just doesn’t seem to be enough. The greater population of merchants are still not EMV-equipped.

Payment gateways are systems that make business transactions possible to merchantssince the gateways are responsible for processing payments via the web. Merchants need a payment gateway that supports two-factor authentication so that their customers will experience the maximum level of security protection.

For example, Authorize.net is among the popular payment gateways in the U.S., but until now, it is still not certified to support chip technology. This poses a problem to the payment gateways clients since they would have to either look for another gateway that is EMV-enabled, or wait for their original gateway to be fully compliant. (PA)

 

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