Despite our close political and economic ties, Americans have traditionally considered themselves distinctly different from Europe. However, when it comes to credit cards, on October 1st America became more like Europe and that’s probably a good thing.
Our friends across the pond have for years benefited from a new generation of chip-enabled smart cards that make credit card processing much less susceptible to fraud. As of the first of October, any American business that cannot process a credit card using smart card technology faces new liability issues and could find themselves forced to accept responsibility for the fraudulent use of the card.
No Small Problem
Credit card fraud takes many forms and is one of the biggest issues facing businesses today. In fact, the amount of fraud adds up to a staggering sum of $10 billion lost per year. That means the use of the best card technology is imperative to protect both businesses and their customers, especially since failure to employ that technology can now expose businesses to new risks.
Slow to Act
Despite these risks, many American businesses have been slow to embrace smart card technology. Surveys show that as of October 1st, 2015, less than a third of U.S. merchants were able to handle smart card transactions, thereby needlessly exposing themselves to avoidable fraud risks. This is even more puzzling considering the ease and low expense of adopting the technology, leading some experts to conclude that many business owners are simply ignorant of both the risks and the solution.
Despite their effectiveness in combating fraud, embedding microprocessor chips in credit cards are not mandated in the United States. The technology simply has not caught on in America as it has in Europe and Canada. Yet, it remains in the best interest of every American business to upgrade their equipment and software as quickly as they can.
One reason why many merchants have not adopted smart cards is because it may require replacing processing techniques and upgrading point of sales terminals. However, under the new liability rules, the party with the lowest processing technology must assume liability, in contrast to earlier procedures where the card issuer simply assumed liability. Therefore, failure to adapt smart card capability can leave businesses on the hook for fraudulent activity.
Time to Act
Chip-embedded smart cards offer the best protection to businesses trying to combat fraud. The technology is neither complicated nor expensive to install, with it possible for a service provider to make the technology conversion in less than three days. Don’t get caught holding the bag when credit card fraud occurs. Instead, join our wise European friends by adapting smart card processing technology now.
Copyright 2015 Axis Payments