Mary Beth: They are.
Mike: I think that’s a really good point. With respect to payment processing, I know that I myself have a Chase card. I went to Walgreens a few nights ago and they’re like, “Oh, you’ve got a chip card. You’ve got to put it in there and let it sit.”, and all of that stuff. What is it about the chip? What does it do? How does it benefit the consumer, the merchant? What’s the confusion about it? I know that there is confusion on the chip cards.
Mary Beth: There is. I’m sure a lot of your listeners have been receiving their updated credit cards and they’ll see that some have a new chip in them. Debit cards and credit cards have the chip in, for the updated ones, and not the magnetic stripe. When the request comes, if you’re at a business, they’ll say, “Please insert card.”, you’ll do that. It’s still random. A lot of the even big businesses, even though they have the chip reader, don’t have the instruction to actually have it inserted.
The big thing is that VISA and MasterCard, the card brands, all of them, it’s been in Europe for several years now, we’re a little slower in the U.S., but, it’s security. It’s helping with anti-fraud. The magnetic stripe was easier to pick up, whereas, ultimately, with the EMV chip, is what it’s called, European MasterCard Visa, EMV, is that, when you have a chip in your card, you will someday be actually asked to put a PIN code in for your credit card. That’s even further, so, if you dropped your credit card in the parking lot, someone couldn’t walk into Target and use it because they wouldn’t know your code. We’re not quite there yet. That’s another layer that’s coming.
Where the pain, I guess, of all this comes in, or the reasoning to pursue getting EMV chip-capable terminal, is that, as a merchant, and I can give you an example of one of my current clients, they’re a printing company. Someone called up, said, “I’d like to order 5,000 T-shirts, the unblocked kind, and I want them delivered here.” It wasn’t a face-to-face transaction. My merchant had a little, “Hmm, that’s a little different.” He Googled where the address was to deliver. “Oh, it’s a house. I don’t think I want to do this.” He called me up and we asked for a few more information. Lo and behold, they stopped the shipment, pulled it back because someone was trying to purchase product. Then, the bad guys want to sell it on Craig’s List, eBay, Amazon. Then, they go back to the merchant, and say, “You know what? I’m charging this back.” Visa and MasterCard will say, “You, Mr. Merchant, will lose, because your credit card terminal is not EMV-compliant.” That’s where the pain comes in.
Maybe, just to quickly clarify any confusion, restaurants, people that do service, like a dentist, or an auto repair, you’re having a face-to-face, wet signature. The card says, “John.” You sign it “John.” That’s the least amount of risk. They have less of a chance or, really, opportunity, for people to try to do a chargeback. That’s their whole goal. We don’t want our merchants to have to eat or lose a chargeback, is probably a better way to say it.
Mike: Is there an element of a penalty or a fine if you don’t have the chip reader terminals by a certain date?
Mary Beth: You know, there was a magic date, or line in the sand, of October 1st of this year, 2015, and that’s really just to funnel more merchants into getting EMV-compliant. There’s no VISA police. The pain or the penalty comes if you, the merchant, experience a chargeback and you lose. “But, I had everything. I got the 3-digit code. I got the expiration date, the zip code, everything.” It’s the sad pain of loss.
Mike: Pretty much, the bad guys won’t even need to conclusively know that. They’ll just do their fraudulent activities and chances are, the merchant is going to not have that. It is just something that, it’s better to be prepared.
Mary Beth: It absolutely is. I would encourage any business owner listening, don’t be afraid of the price of these new EMV terminals. They’re less than your smartphone. They’re $200, maybe $400 if you need a wireless that actually prints a physical receipt. We’ve got the EMV swipers that fit on your smartphone or tablet. They’re like, 60 bucks or $100. It’s a painful lesson to learn, if you didn’t, because you were trying to pinch a penny, to lose hundreds.
Mike: That one transaction that is denied because of your failure to comply, pays for it 2 or 3 times over. That’s the first one.
Mary Beth: Exactly. It’s true, though. Yeah. As consumers get more and more savvy, they’re paying attention to, “Oh, that’s the kind of credit.” They’ll quickly know there’s no place to insert a credit card. They can quickly flag or find things in it. It’s just part of advancing your business. People, like I mentioned, are great to want to upgrade their smartphone or get a better computer, but this is the price of your business. It’s just really important.
