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EMV Updates and Your Restaurant

On Oct. 1, 2015, something big happened for small business owners all around the U.S.  Starting that month, EMV credit card updates were officially rolled out throughout the U.S. economy, and the consequences for small and medium-sized business owners are significant.  If you haven’t been paying attention to the EMV rollouts yet, there are some very good reasons to start now, and update your restaurant’s credit card capacities to accept EMV enabled credit cards.  Here’s a closer look at October’s updates, as well as a few reasons why you should care as a restaurant owner.

What Are EMV Credit Cards?

Around the world, EMV credit cards have been the standard in many countries for a while now, but the updates have only really hit the U.S. as of late 2015.  EMV enabled credit cards have a chip implanted for added security, as chip-based encryption has been found to be much more reliable and better at protecting data than traditional magnetic strip cards.  Some banks have issued EMV compatible cards for years, but as of 2015 all credit card companies and banks have been responsible for making EMV compatible cards available to American Consumers.

As the U.S. shifts towards an EMV standard, many consumers still rely on magnetic strip-based credit cards, and many small and medium-sized businesses still accept cards with EMV chips.  The transition towards EMV cards has been slow overall, and many businesses still haven’t gotten around to ordering new EMV compatible machines.  But, as a restaurant owner, you should take action to make sure that your business has fully embraced EMV as soon as possible.  Here are a few reasons why.

EMV Updates and Liability Shift

Starting in October 2015, businesses who accept credit cards without EMV chips can face some serious consequences.  From an economic perspective, one of the most serious repercussions is that there has been a shift in liability where businesses and fraud are concerned.  Prior to the EMV updates last year, when an individual committed fraud by using someone else’s credit card, credit card companies typically assumed liability and covered damages.  Now, things are very different.

If your business accepts a credit card without an EMV chip, liability for fraud falls upon your restaurant.  That means that you will be personally responsible for covering all fraudulent charges that occurred at your business, assuming the fraud occurred with a credit or debit card that relies on dated magnetic strip security.  The amount your restaurant will be responsible for covering depends on charges, but the shift in liability is significant and can be a major issue for small business owners.

Investing in EMV for Your Restaurant

This shift in liability has more major ramifications if your restaurant doesn’t have EMV compatible card reading technology.  If your business is not in compliance with the national EMV updates, every card you read could result in your business shouldering liability.  Banks and credit card agencies will only be responsible for fraud liability for EMV compatible cards that are read by an EMV compliant credit card reader.  This means that if you want to avoid the burden of fraud liability, it’s a good idea to invest in EMV compatible equipment for your restaurant.

Investing in this EMV compatible equipment will cost you a bit of time, money, and energy in the short term.  You will need to order the EMV compatible equipment, make sure that your staff has been trained to use EMV readers with newer cards, and spend time coordinating with credit card companies to assure compliance and compensation.  It’s a bit of work, but it’s really an investment in your restaurant’s future: once you are fully EMV compliant, your restaurant will be a less responsible for shouldering the burden of fraudulent charges.

EMV in 2016?

While there was a lot of attention paid to that deadline on Oct. 1, the reality is that it will take the U.S. economy as a whole a bit of time to catch up.  Some consumers still haven’t been issued EMV compatible cards, and many small businesses haven’t adopted EMV compatible equipment yet.  However, as noted above, there are some major consequences if you choose to ignore EMV updates at your restaurant.

Ultimately, EMV technology isn’t going anywhere.  In 2016, more and more consumers will be equipped with EMV compatible credit cards, making it more dangerous for your restaurant to avoid adopting relevant technology.  EMV is the global standard, and while the U.S. has been slow to catch on, EMV enabled credit cards are considered superior in just about every way and aren’t likely to be replaced in the near future.  Some businesses will inevitably wait until it’s too late to get on board, but it’s a smart idea as a restaurant owner to pay attention to the EMV updates and make sure your equipment is compatible as soon as possible.