Employers Need to Ensure Credit Card Processing Compliance In the Wake of Evolving Microchip Technology

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Employers, have you personally received new credit cards in the mail recently? Cards with embedded microprocessor chips in them? And the merchant (Visa, MasterCard, Amex, et al.) tells you to destroy your old card immediately and assume using the new card with the chip at once? You should be aware that this new EMV (“Europay, MasterCard, and Visa”) technology may also play a role in your business operations as well.

There are new requirements for vendors processing credit cards that cause a significant shift in liability for certain types of fraud. Merchants that fail to adopt the EMV chip-and-sign technology may be liable for counterfeit, lost and stolen card transactions at their location. Merchants who do adopt the technology will likely continue to enjoy protection from liability if any fraudulent transactions occur after the adoption date. The new requirements specifically place liability for fraud on the merchant failing to adopt the new technology for losses occurring at its location.

At this point in time, most merchants have made or should have made the change and also updated their EMV credit card processing systems. According to some experts, this “leaves the changes necessary to avoid potential losses from credit card fraud in the hands of business owners.”

There are some important exceptions: On-line sales and manual entry of credit card information are specifically not included. Further, the party/entity supporting the most secure technology against fraud will prevail in a chargeback; and in the case of a “technology tie”, the fraud liability as of the deadline date (October 1, 2015) generally is expected to remain as it is today – with the issuer.

To prepare for this change, our members who use credit card processing equipment at their business or with technicians or other employees at the point of sale should check with their merchant processors to verify that they are in compliance.

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Posted In: Legal, Management, Money