Chargeback [chahrj-bak] noun: Ugly debits to the business bank account that come out of nowhere, and eat up profit that could be used to pad the coffers; buy more advertising, or better yet, more inventory; maybe pad the employee bonus fund for the upcoming holidays. If you’ve been in business longer than two years, and have never once received a chargeback, consider yourself lucky; knock on wood, cross your fingers, rub a lucky rabbit’s foot. You’re a rare breed, and whatever it is you’re doing, keep on doing it.
In 2012, merchants absorbed 37% of the credit and debit card reported loss, meaning businesses around the world shared the burden of paying back 4.17 billion dollars globally. According to studies conducted in 2014, 17% of Americans have been victims of either credit card or debit card fraud. How often have you asked yourself why the banks aren’t doing more to stop card fraud at the source? It makes sense, right? You do your due diligence at the counter – check the card for the signature, ask for a driver’s license to confirm identity, enter in the last four numbers of the card and the 3-digit security code on the back. Everything checks out, but a month later, your bank account gets hit with a chargeback debit for duplicate/stolen card, and there isn’t a thing you can do about it. If your hands are tied, then why isn’t the bank that issued the card doing more to help? Why aren’t Visa and MasterCard, for that matter?
Enter EMV. EMV, which stands for EuroPay. MasterCard, Visa, is a joint program created by the major card associations in an effort to combat stolen, duplicate cards at the Point of Sale. If you’ve ever been to Europe, you’re very familiar with this program; in some parts of Europe, if your card doesn’t have a chip in it, you can’t use it – not even by swiping the card through the reader. EMV itself is not a technical device, but rather a set of standards drafted to ensure today’s technology is working as hard as it can to protect both merchants and cardholders. The planned roll out for the United States, coming late 2015, is targeted for the retail sector first – those businesses that deal primarily with face-to-face customers, and swipe the majority of their cards. By adopting both smart chip-cards and smart chip-capable terminals, duplicate card fraud should drastically decrease, a vital win in the fight against card fraud.
Most major banks in the U.S. have been issuing cards with EMV smart chips in them for the last two years; terminal vendors for merchant equipment have begun rolling out EMV-compliant terminals as well. Processors and platforms are pushing the updates this year to support the new security protocols. EMV is coming, and the more prepared businesses are, the easier this transition will be.
Call your processor to verify the EMV-readiness of your merchant account and terminal; be aware that customers will start asking questions about EMV and how you intend to process EMV transactions. And as always, Superior Financial Systems is here to help – whether you process with us or not, if you have any questions about EMV and how to best ready your business, we are here and ready to guide you.
For further information, please call Todd Lazar at (888) 737-7762 or by e-mail [email protected].
