3 Misconceptions About Credit Card Fraud And Your Business
Everyone’s talking about credit card and point-of-sale (POS) fraud, but the chatter has led to a few misconceptions. By putting the headlines aside, businesses will see there are several opportunities to adopt new technologies that can help eliminate the risk of fraud.
1. EMV Point of Sale protects business owners from all fraudulent transactions.
Fraud doesn’t just happen to major corporations like Target and JPMorgan Chase. Smaller businesses are prime targets, too.
EMV chips mitigate fraud with a technique called tokenization. Tokenization means that every time you pay with an EMV card in person, the unique information that identifies the card changes and card information copied from one transaction can’t be reused.
Because EMV chip cards cannot be easily counterfeited, criminals are more likely to prey on merchants who lack EMV credit card terminals, because they can continue using their tried-and-true magnetic-strip credit fraud techniques. However, the liability shift only applies to “card-present” counterfeit EMV fraud. Essentially, this means that if a fraudster comes into your business with a fraudulent EMV card, and you process it as a traditional magstripe transaction, you can be held liable since it was not processed as an EMV transaction. This is called a chargeback, and there are several ways this can occur with an EMV chip card.
“Make sure your EMV point of sale provider has your best interests in mind by offering you assurance that you will be fully-covered for any EMV-related chargebacks that take place in your business,” says ShopKeep President and CEO Norm Merritt.
2. Mobile payments are less secure than traditional credit and debit cards.
The truth is that in many ways, mobile payment apps are more secure than traditional plastic cards. Most mobile payment services take advantage of the same tokenization technology used in EMV cards, so the information used for transactions changes every time. Apple Pay, for example, uses both encryption and tokenization to protect data and reduces sensitive data transmission down to one instance. Some mobile services even require a fingerprint scan to finalize payment.
”As technology continues to evolve, it’s imperative that merchants ‘future-proof’ their business by choosing a POS system that seamlessly integrates new technologies, in this case mobile payments,” says Merritt.
3. Your business is solely responsible for preventing fraud.
Your business doesn’t have to fight off fraud alone. Credit card payment processing vendors also share in the responsibility in preventing credit card fraud.
In 2006, the top payment card companies (Visa, MasterCard, American Express, Discover and JCB) formed a group called the Payment Card Industry Security Standards Council (PCI SSC) to create and enforce a universal security standard for payments, for all businesses to follow. If you accept credit card transactions and collect sensitive customer information through your POS system or card terminal, you are held to this standard. If you fail to be compliant, you are sometimes subject to fees from your bank or processor in the event of fraud. Banks and processing companies are often fined as high as $100,000 per month for compliance violations, and some of those costs are handed down to business owners.
Since the 2015 EMV liability shift, businesses that do not implement an EMV chip card reader to process credit card transactions bear the cost of the fraudulent charges made at their POS.
The standard also applies to all companies involved in your payment processing—they are held accountable for their role in contributing to breaches. Make sure your POS service is PCI compliant.
By understanding the truths behind these three common misconceptions, you can significantly reduce your business’ exposure to potential fraud.
ShopKeep’s iPad point of sale solution is EMV compatible and has point-to-point encryption technology. As an exclusive, special offer, ShopKeep is offering a free EMV compliant card reader to Time Warner Cable Business Class customers when signing up with ShopKeep.
This Time Warner Cable Business Class article includes references to websites created and maintained and services provided by third party entities not affiliated in any way with Time Warner Cable Inc. Time Warner Cable provides this information solely for our Business Class customers’ convenience. Time Warner Cable does not control or guarantee the accuracy or completeness of information contained on any third party website nor does it endorse the views expressed or products/services offered by the third parties. All users accessing any website referenced in this newsletter will be subject to the policies of the owners/sponsors of the third party website. Time Warner Cable assumes no responsibility of any kind for damages that might result from use of the third party services or websites. All trademarks remain the property of their respective owners.