Hopefully you’ve heard of the 2015 fraud liability shift, which places the blame on your business for all card present fraud when accepting counterfeit magnetic stripe cards. You’re dedicated to payment safety. Great! Your business is officially covered as long as it has an EMV terminal, right? This is unfortunately not the case if your not actually using the chip card reader. The dangers of swiping chip cards instead of dipping them into the slot could cost you thousands of dollars. Remember, always dip the chip!
What’s the Level of Certification of Your Terminal?
Some credit card terminals, even if they claim to be EMV, are not technically certified. The technology isn’t working and therefore the register attendant requests you use the magnetic swipe instead. Even though all the pieces of a safe transaction are there, the business owner hasn’t quite put together the puzzle. This terminal may only be level 1 certified. The highest level of certification is 3. A level 3 certified terminal will have:
- The Hardware: You physically obtain an EMV capable terminal
- The Software: The data written to facilitate transactions is working properly
- The Brand: All major card brands are tested for safety using the terminal, and the application of a safe payment has been approved
Bank Initiated Chargebacks
Apart from the other dangers of swiping chip cards, there’s bank initiated chargebacks. These can occur even if the transaction in question isn’t fraudulent. What happens is your customer’s bank notices a charge occurred at your business where the chip card that they issued to their cardholder was swiped. They can can initiate a chargeback without even contacting the card holder. Banks have begun doing this at random to incentivize businesses to dip their chip cards instead of swiping them. See how swiping a chip card cost this photography business $5,368.75.
Are The Dangers of Swiping Chip Cards Worth It?
As a financially savvy business owner, you should weigh the costs. Will fraud charges or an EMV terminal upgrade cost you more? What if your payment processor doesn’t offer level 3 certified terminals? What will happen to your business when banks stop making magnetic stripes on credit cards altogether? PayFrog can’t officially give your business legal advice, but we know for sure that protecting against fraud saves businesses a LOT of money. Plus, certain businesses can qualify for a FREE EMV Terminal upgrade.