Credit Card Liability And You

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  • Credit Card Liability And You

Credit Card Crackdown

What is going on with that whole credit card change out, due to be completed by October? It looks like there will be a big panic right at the last minute as retailers (including the fitness industry) will be doing all of the things that they should have done already to try to accommodate the mandatory shift over to the EMV Chip-and-PIN cards for all electronic payment transactions.

In recent years credit card companies and merchant services have clamped down on the amount of information that they allow vendors or retailers to retain at the point of sale. This resulted in the switch from batch processing of card sale once a day to live processing. That saves the card company from carrying that loss. I can’t think of any downside here, other than you might have to wait a few seconds longer to process the transaction. With the upcoming switch to Chip-and-PIN you may have to carry any losses due to fraud.

One Nation Behind The Times

There’s a solid reason behind why the card companies are for all of these changes: Fraud! Abuse of cards is a big problem for the industry. The solution is to encode the account information in a way that conceals it from the retailer and any malicious third party listening in. The chip card is not an America invention it has been used in Europe, the UK and Canada for a number of years now. The advantage of chip cards is that they have been shown to significantly reduce the opportunity for theft by hacking.

The result is that the United States has become the only market to send all card numbers and PINs unencrypted over the wires. That has meant that all the black hats that once robbed the world now only have had a smaller market to plunder, us! The Target Scandal of breached data was arguably the natural outcome of this state of affairs.

As a gym business you’re probably never going to have a problem with card rejections for monthly memberships and training sessions, as the payment precedes the delivery. If you have a high turnover retail merchandise section there could be a greater concern with card fraud. So the fear in credit card companies of loss through fraud might be well justified and there are some examples, such as the Target breach, that are driving the narrative right now.

The chip cards are going out to the card members and card reading equipment is being updated at great cost to the nation. But there is one thing that I find a little disturbing; store clerks are still opting to use the strip on cards instead of the chip ports. I even experienced being told off by clerks for going for the chip reader once. Of course it may not have been live but the impatience that went with it got me thinking: This might not be such a smooth transition after all.

Are You Ready To Dip The Chip?chipcard

We have a big change coming in card services and I am wondering if it is going to be handled smoothly or it will precipitate a last minute panic that turns into a media circus of bad PR for companies that are less than prepared. Make sure you have readers that are compatible with the new EMV cards. Yes, that means you have an extra expense this year. It’s all part of the estimated $8.5 billion that American business is on the hook for because of this change.

You also need to ensure that your staff is confident in using it. Of course they will probably pick it up over time on their own initiative. But if they don’t they will be swimming in the shrinking pool of vulnerable points of sale and the sharks will be circling more closely as they fight for the last of the tasty morsels of credit card fraud. With the shift in liability for losses due to fraud under the new regime you need to make sure that you and your team don’t become the weak links in the security chain.

Bibliography

Edwards, Jim. All American Credit Cards Will Disappear In 2015 And Be Replaced With This New Tech. March 2, 2014. http://www.businessinsider.com/chip-and-pin-credit-card-changeover-in-2015-2014-2 (accessed May 15, 2015).

Fagan, Lawrence. Target’s Data Breach Impacts the Health Club Industry. May 19, 2014. https://blog.gyminsight.com/2675-targets-data-breach-impacts-the-health-club-industry/ (accessed May 15, 2015).

Kossman, Sienna. 8 FAQs about EMV credit cards. March 15, 2015. http://www.creditcards.com/credit-card-news/emv-faq-chip-cards-answers-1264.php (accessed May 15, 2015 ).

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