Liability switch could leave merchants holding the card

The days of the swipe are over. Get ready to dip.

The anti-theft credit card technology that has been a standard overseas for the past decade is now making its way into the U.S. Known as EMV - an acronym for Europay, MasterCard and Visa, the companies that initiated the technology - it replaces magnetic stripes with a smart chip that prevents hackers and data harvesters from obtaining cardholder information.

The nation is still in the midst of the conversion to EMV, but a recently-passed deadline could put merchants - especially small business owners - in a perilous situation. As of Oct. 1, banks and credit card companies are no longer liable for fraudulent purchases made on EMV cards from merchants who do not have EMV-enabled point-of-sale terminals.

What that means is, if your business doesn't have EMV-ready terminals, you can be left holding the bag for that fraud. That's a big concern to banks and credit card companies because as of September, less than half of the terminals in the U.S. are EMV ready.

And most of those still needing to comply are small businesses.

"Our concern is number of small business owners who are not ready and don't even know about the liability shift," said Steve Pedersen, vice president and head of corporate card products for BMO Harris Bank.

"That's fairly punitive when you think about it," he added. "Not being knowledgeable about liability shift is something that personally concerns me."

Bruce Menkes, founding partner of the law firm Mandell Menkes LLC in Chicago, notes the liability issue will only affect merchants who accept EMV card purchases during an in-store transactions. It will not affect merchants who accept the cards in phone or e-commerce sales, and gas station transaction are also exempt until 2017.

The percentage of online versus in-store sales may be a factor in why some small businesses have been slow to upgrade, but the risk of absorbing the cost of fraudulent purchases should be a catalyst in making the switch as soon as possible, the experts noted.

Menkes added business owners may not be aware of the liability shift due to a lack of publicity through the media and from institutions that provide the point of sales systems and card processing.

"I haven't seen to much in the mainstream press or business press about it," he said. "The credit card companies are big on information, but payment processors working with small companies have not been as good as they should have in getting the word out."

Pedersen noted small business owners may be putting off making the transition because of other priorities needed to run a small business.

"Every small business owner is stretched. There's always incredible demands on their time," he said. "There's so much going on, you unfortunately need a catalyst to stimulate the change."

While the cost of EMV-enabled devices may also be an issue, Pedersen said it may not be as big as some owners think.

"A stand-alone POS not difficult to change over," he said. "An integrated system is more expensive. The terminal price is not bad, but the programming and testing is where the cost is involved."

If you're still operating your business without EMV equipment, Pedersen and Menkes recommend contacting your payment processor or merchant acquirer to request the new system.

"Whoever they have that relationship with, call your contact immediately," Pedersen said.

Until they convert to EMV, Menkes said merchants should be extra vigilant in all of their credit card sales.

"Make sure the signature of the owner looks same as the signature on back of card. Those kind of things will always help them," he added.

One thing merchants have to their advantage, Menkes noted, is that the rollout of EMV cards to consumers is still an ongoing process.

"Only 40 percent of cards out there are chip," he said. "A lot of consumers just don't have them yet."

News bytes

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Elk Grove Village-based Stern Pinball Inc. is expanding its partnership with FarSight Studios to develop a new digital platform of Stern's machines.

Called Stern Pinball Arcade, the platform will feature exact replicas of Stern's hottest terrestrial pinball machines, the company said.

"Both gamers and pinball enthusiasts of all stripes and abilities will love the new products we create together," said Stern Pinball CEO Gary Stern.

Availability of the new products and pricing will be announced later this fall.

• Downers Grove-based mobile app developer Lextech was recently chosen as one of the top three app developers in the Tabby Awards/Business Enterprise category.

Lextech was selected for its App Roadmap app, part of Lextech's App Roadmap Workshop that teaches business leaders how to identify apps that support organizational goals.

, solve relevant problems, and deliver a high Return on App for their organization.

A total of 150 apps judged by an international panel of 24 independent mobile experts chaired by Carson Conant, CEO of Chicago-based mobile technology company Mediafly. From there, 56 tablet-optimized apps were selected as Tabby Awards/Business nominees in various categories for both iPad and Android platforms.

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• Two Woodstock schools have gotten a tech tune up, thanks to a national contest and Des Plaines Office Equipment in Elk Grove Village.

DPOE recently installed two Sharp Aquos Board interactive display systems at Westwood Elementary School and Woodstock North High School. The schools were runners up in a national competition hosted by Sharp Imaging and Information Company of America, and were selected for demonstrating how they would integrate Sharp technology to create a more engaging learning experience.

DPOE, the Chicago area distributor of Sharp Imaging, handled the installations at each of the schools.

"The capabilities of these video boards are extraordinary. We know that both the elementary and high schools will make good use of this new technology, and it certainly puts them in a strong competitive position," said DPOE President Chip Miceli.