John Giles, President of Future POS, Discusses EMV 1 of 2
Today’s post is the first in a two part series discussing EMV technology and the hospitality industry. John Giles, President of Future POS, Inc. answers your pressing questions on changing compliance standards and the implementation of EMV in the United States.
The State of EMV, One Year after the Liability Shift
Well, it’s been almost a year since the card brands did their Liability Shift on merchants using Non-EMV solutions, and some of what has transpired in the last year was very predictable, while other aspects of the EMV rollout have caught even seasoned industry experts by surprise. In case you don’t accept credit cards, here’s what the rest of the industry has been dealing with.
“Liability Shift” Chargebacks
While myself and everyone else assumed that industry statistics would hold true (only 9% of credit card fraud comes from hospitality, so the impact should be minor), it’s been quite the opposite. What should have been a minor inconvenience has been anything but, and some acquirers have taken this opportunity to use the liability shift to recover bad debt. While EMV was intended to stop counterfeit cards, the wording of the liability shift allows for chargebacks on “any non-EMV transaction”. It doesn’t have to be a fake card – just a bad debt. Someone could get a credit card one month and eat at your restaurant, then default on their credit card and guess what? The acquirers can come back and take that money from you, not because the card was fake, but because the “Liability Shift” allows them to put their bad debts on the merchant. A recent report put the profits from the liability shift at $5 BILLION for the payment industry. As you can guess, lots of class action lawsuits are being put together, and some of the card brands have even grown a conscience (or fear of litigation and bad press). The result of this is that some processors have backed down on dumping all these chargebacks on their merchants.
EMV Rollout Debacle
You would think that companies making billions of dollars would have a good handle on technology and rolling out new platforms. You would think! But nothing could be further from the reality we all are facing. Here at Future POS, we have integrated multiple EMV solutions only to find that they just don’t work, or they take 90 seconds to work – when they work. It absolutely blows my mind to think that with millions of dollars and years to prepare that these solutions aren’t world class. As it stands, most credit card processors are patching together half-baked solutions from third parties. Many companies are throwing up their hands and saying “just get a stand beside terminal”. Talk about going the wrong direction!