There may be serious consequences for small business owners if they don’t follow new credit card liability rules that take effect this fall for credit cards. These new rules will take effect in October and specify that businesses that do not upgrade to credit card equipment that can read, EMV chip-enabled cards will be liable for fraud and security breaches. Yet, a Wells Fargo/Gallup Small Business Index survey found that only 32% of owners are aware of the pending changes.
According to Wells Fargo, among business owners who report accepting point-of-sale card payments, only 31% say that their existing credit card processing system accepts chip-enabled cards. When asked if they plan to upgrade their point-of-sale credit card terminals to accept EMV chip cards, just 29% of business owners said they intend to make the change before the Oct. 1 deadline. Another 34% of business owners reported they will do so at some point in the future after October, and 21% say they never plan to upgrade.
To meet the Oct. 1 deadline, financial institutions are issuing EMV chip credit and debit cards, designed to protect against fraudulent transactions by encoding cardholder information within an encrypted microchip and data that changes with each transaction. Several retailers are converting to new card readers or adding EMV capability to their existing magnetic stripe card reader payment terminals.
“While our industry has made great progress in the last year informing and preparing small business owners for the EMV liability shift, the survey findings show us that we have more work to do,” said Debra Rossi, head of Wells Fargo Merchant Services, in a statement. “At Wells Fargo we continue to focus on providing business owners the support they need to get ready–from reaching out to business owners who are directly impacted to offering a wide array of resources that help business owners understand EMV, its benefits and the impact of the upcoming liability shift.”
In the survey, cost was among the top reasons business owners cited for not planning to swap their terminals before October. About 46% revealed that they did not want to pay for the costs associated with upgrading. What’s more, 46% are not at all concerned about the liability shift in the case of fraud.
Business owners are divided about whether the liability shift will reduce fraud for businesses, the main objective of EMV chip-enabled cards. The survey revealed that 42% feel it will improve protection from fraud, and 42% feel it will not improve protection from fraud.
Wells Fargo has pursued a series of actions to build awareness, prepare small businesses for the EMV liability shift, and encourage business owners to adopt EMV chip-card technology, including providing EMV-capable equipment to customers since 2012. In addition, all new and re-issued Wells Fargo Business Credit Cards and Business Elite Cards provided to customers are chip-enabled.
Wells Fargo also is offering business owners a number of resources, including dedicated expanded support through its customer contact center and useful tips online about the process and benefits of accepting EMV chip card payments and the importance of EMV chip cards and reducing fraud.