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Make the Switch or Pay the Price

Release Date: 
Tuesday, October 27, 2015
Release Number: 
16-1028KY
Contact: 
michael.ashcraft@sba.gov or 502-582-5971, extension 225

By Cassius F. Butts, Regional Administrator, U.S. Small Business Administration

A major transition is happening in America, and business owners who fail to act will pay the price. U.S. credit card companies dedicated October 2015 as the national adoption of chip cards. Businesses that have not integrated EMV (Europay, Mastercard, Visa) technology to process chip cards will become financially responsible for fraudulent transactions that had previously been covered by the cardholder’s issuing bank.

Roughly 90% of credit card terminals in Europe are now chip-enabled. The United Kingdom has seen nearly a 70% decline in counterfeit card transactions since making the transition, according to Barclays. Meanwhile, the U.S. has 25% of the world’s credit card use but 50% of the world’s credit card fraud, making the case to shift from antiquated swipe-and-sign to microchips on credit cards.

The U.S. Small Business Administration (SBA) is concerned that too many entrepreneurs in the U.S. are at risk of being left in the dark and on the hook. The majority of America’s small businesses will need to upgrade their payment systems, as only about 20% of payment terminals are currently equipped to accept chip cards, and most of these are at larger retailers. Accepting contactless payments also requires new technology for most businesses; a recent report shows that 87% of small businesses do not currently accept mobile payments. Depending on the cost of the goods and services that a small business sells, assuming fraud liability could have serious financial consequences.

Small businesses do not have fraud departments and cannot afford to be behind the curve while their large competitors move forward with technology upgrades. That is why the SBA has partnered with Square to enhance payment security and to protect cardholder information. We are educating small businesses on the transition to EMV cards, so check out www.sba.gov/emv to make the switch.

Additionally, we rolled out a cybersecurity page for small employers at www.sba.gov/cybersecurity. This includes an SBA self-paced online cybersecurity course and a free small biz cyber planner developed by the Federal Communications Commission (FCC). We also plan to host additional regional small business cybersecurity workshops from our long-standing partnership with the FBI and National Institute of Standards and Technology.

It is crucial to invest in EMV readers and other digital technologies to prevent cybersecurity fraud and protect the integrity of customers’ sensitive data. Many new EMV-enabled and contactless systems are just hitting the market. There are many affordable hardware solutions that will not break the bank of our small businesses. In fact, accessories to complement existing payment terminals are already available, with more coming online every day.

We hope that your small business joins the movement to switch to EMV technology. It will reduce risk for your customers while protecting your bottom line.