EVM Chips, Credit Cards, and Liability: What You Need to Know

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It’s all too easy as an HVAC contractor or business owner to think that your commercial niche is safely tucked away from the dangers of hacking for credit and debit card information. But your customers are bound to have much different perceptions. A new report by Bankrate.com shows that nearly eight in 10 Americans (77 percent) are frightened of having their identity stolen—including 23 percent who are “very frightened.” And close to 50 percent of the 1,000 respondents knew someone who’s been a victim of identity theft—including themselves.

Thankfully, a new solution should not only ease such fears, but prevent future thefts: EMV chips. EMV stands for Europay, MasterCard, and Visa, the three companies that created what is now the global standard for cards equipped with computer chips. Along with that comes the technology used to authenticate chip-card transactions—which you’ll want to have in place as soon as possible, as new EVM cards are already in the hands of your customers.

What does this mean? Prior to October 1, if you ran a fraudulent card through your system, banks absorbed the costs. But starting this month, there’s been a 180-degree liability shift. So if someone pays with a counterfeit, lost or stolen EVM chip card—and you’re not set up with an EMV card reader—banks will not be responsible for the loss. This applies universally to American Express, Discover, and MasterCard, with six more payment networks (including Visa) shifting liability on the lost/stolen side.

How will this work? Let’s say a deceptive customer buys a $3,500 central air system with a counterfeit EMV chip card, and you don’t have a chip card reader to process the transaction. Once the damage is done, you’re probably on the hook for the entire amount. (Think: How hard does one of your employees work to make $3,500?)

To avoid this type of disastrous scenario, you will need to make sure you have EMV chip readers at every point of sale. This is especially critical if your workers in the field are authorized to take payments by a mobile system such as Square. You can click here to reserve Square’s EVM readers, which cost $49 each.

There are also two different ways to use in-store EVM terminals, which work differently than card swiping machines for magnetic stripes. With the “contact” system, consumers insert their cards in the terminal slot and leave it in there, as the verification process takes up to eight seconds. You’ll also have to remind your customers to take their cards afterwards, something that wasn’t a factor with the old system.

And with the “contactless” version, customers wave their card in front of the reader, which uses near-field communications to read the chip and issue a one-time user number for the transaction. You’ll need to decide which way to go, though customers may find more comfort with the contact method, as it resembles magnetic swiping (a familiar movement) and reads the card inside a machine as opposed to through a waving motion in the air.

For the time being, EVM migration is still a work in progress for card issuers, as about 70 percent of U.S. credit cards have them. The full process will likely continue through 2016, and payment authorizations taken online, by phone, or by mail do not fall under the new EMV rules. EVM cards are also doubled up with magnetic strips for merchants who haven’t yet switched over.

You can start the process for acquiring EVM terminals through your terminal provider. Companies such as BNG Holdings also sell machines that are EVM-ready such as the Verifone MX850, which retails for about $550 at various outlets. Additional information is available at EVM Connection, a site created by the Smart Card Alliance to answer questions about the new payment technology.

If you’re curious, you can also try EVM in your day-to-day shopping at other merchants who use it. Ask questions: how it’s worked out, where they bought terminals, what advice they can offer. Transitions in how you do business can cause pain, but in this case there’s a long-term gain: protection from fraud and a customer data breach.

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Posted In: Management, Money