Updates to credit card systems coming in October 2015
Major credit card companies have announce at the beginning of this year that there will be a new credit card system put in place for the United States (US) by October 2015. Beginning later next year, they plan on cutting over to a microchip embeddedd card instead of the magnetic ones we use today.
This means the consumer will no longer swipe their card but instead, will insert the card into a machine that will read the microchip. This technology is already being used in other countries and the US is the last major market to adopt this technology.
The change is being implemented to prevent large-scale credit card theft. Almost half of the world’s credit card fraud takes place in the US. Major retailers have also become targets by hackers for large scale credit card data. These hacking attacks will become much more difficult under the new system.
When should small businesses upgrade their credit card equipment?
For handling VISA and Master Card transactions you should look to upgrade your equipment as soon as possible. Upgrading now will help to prevent any bugs that might happen when the rest of the world decides to switch over. Walmart, for instance, is already beginning to use the new equipment now. Merchants should reach out to their card processing companies for the new terminals.
Banks are also already starting to issue the new credit cards to their customers.
What happens to small businesses that don’t upgrade credit card equipment?
Those who don’t upgrade to the new equipment will still be able to handle transactions but there will be a liability shift in October 2015. That means that the person with less technology will be responsible for fraudulent transactions. So if you still choose to swipe cards and there is a chip embedded in them after October 2015, the liability will be with you for the transaction. But, if the bank issuing the credit card is still using the old magnetic technology and didn’t upgrade their clients’ credit cards to the microchip technology, then they will be liable.