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Approaching EMV deadline finds many unprepared

Less than half of small firms surveyed ready for October deadline

Approaching EMV deadline finds many unprepared

Most small business owners don’t even know about the impending EMV liability shift coming in October—let alone are ready for it—according to the latest Wells Fargo/Gallup Small Business Index.

In the quarterly survey, less than half (49%) of small business owners who accept point-of-sale card payments today report being aware of the Oct. 1 liability shift. That’s when a card issuer or merchant that does not support EMV-chip card technology will assume liability for any fraudulent point-of-sale card transactions.

Responses from small firms’ owners

To meet the Oct. 1 deadline themselves, financial institutions are issuing EMV chip-enabled credit and debit cards, designed to protect against fraudulent transactions by encoding cardholder information within an encrypted microchip and data that changes with each transaction.

For their part, merchants need to convert to new card readers or add EMV capability to their existing magnetic stripe card reader payment terminals.

However, among business owners who report accepting point-of-sale card payments, only 31% say that their existing credit card processing system accepts chip-enabled cards. When asked if they plan to upgrade their point-of-sale credit card terminals to accept EMV chip cards, just 29% of business owners said they intend to make the change before the deadline. Another 34% of business owners reported they will at some point in the future after October.

Yet 21% say they plan never to upgrade.

In the survey, some of the top reasons business owners said they do not plan to swap their terminals before October include:

• 48% feel that upgrading their payment terminal will not impact their business.

• 46% do not want to pay for the costs associated with upgrading.

• 41% are not concerned about the liability shift in the case of fraud.

The survey shows business owners also are divided about whether the liability shift will reduce fraud for businesses, the main objective of EMV chip-enabled cards. Forty-two percent feel it will improve protection from fraud, and 42% feel it will not improve protection from fraud.

Not all about plastic and bits, after all

Despite the split between businesses that intend to upgrade their payment terminals to accept EMV chip cards and those that don’t, small business owners share one commonality: check or cash is still the preferred method of payment.

In the survey, business owners were asked about the type of payments their business currently accepts. Among key findings:

• 94% of small business owners say they accept check or cash as a method of payment.

• 41% of business owners surveyed accept debit card payments and 35% accept point-of-sale credit card payments.

• 15% of small business owners surveyed take payments in-person via a mobile-enabled credit card reader.

• 25% of business owners surveyed accept payments online via credit card and 19% accept online payments through a payment provider such as PayPal or Google Checkout.

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Webinar: Real-Time Payments in the U.S. Market

Time/Date: June 16, 2021 2:00 p.m. ET

The U.S. has come a long way in its journey to real-time payments, with TCH and Zelle in market and FedNow just around the corner. COVID-19 has accelerated that demand to move to real-time. Yet many financial institutions remain unconvinced of the need to move, with less than 3% of financial institutions signed up today.

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