As you might already know, October 1st of 2015 marked the deadline of a liability shift that concerns EMV chip card technology in the United States. Times have changed and businesses that do not support EMV or Europay, MasterCard and Visa cards will have to be responsible for any fraud that happens in their store once the liability shift reaches full implementation. It has been observed that bigger brands and corporations have an easier time with being EMV compliant, but small to medium-sized businesses are still struggling to meet the deadline. Here are some reasons why these SMEs may have a hard time and trailing off.
Payment gateway problems
Being EMV compliant may not be as simple as just installing EMV-enabled tools and devices. Merchants will also need to make sure that they have EMV-compliant payment gateways as well. Payment gateways are known as systems that make facilitating transactions possible to merchants as well as processing payments online such as the web. Today, merchants must have a payment gateway that provides two-factor authentication capabilities. It is needed for customers to experience a maximum level of security protection.
Surprisingly, there are popular payment gateways in the country that are still not certified to support chip technology and this poses a problem to customers who use them. The affected customers will have to wait for their original gateway to be fully compliant or search for another gateway that is EMV-enabled.
Due to a fast-approaching cut-off date, over 70% of merchants have missed the deadline. Reasons include smaller businesses and merchants not being ready and not by a long shot. As expected, there were businesses that were asking credit unions for extensions as well. Organizations such as the Food Marketing Institute or FMI for short have stated that no matter how many dollars invested or strong the commitment, the truth is that the system will not be ready to meet the mandates set by card networks for the liability shift. While credit card companies have given businesses up to four years to prepare for the shift, it just does not seem to be enough and a majority of merchants are still not EMV-enabled.
Keeping up with costs
Through extensive research by organizations such as Javelin Strategy & Research, results have shown that it may take more than $8 billion to replace all existing POS or point-of-sale systems, credit or debit cards and ATMs throughout the nation. On the other hand, major businesses are willing to take the plunge and invest on EMV, spending millions of dollars to upgrade its software and hardware to meet the terms set by EMV chip card technology. Also with this upgrade, these companies will have to issue new chip cards to their customers to replace old ones. While big players can very well afford such costs, the same does not apply to SMEs due to possible lack of resources and limited budget. Hence, SMEs are still struggling with the shift to EMV.