The recent legislation regarding Payment Networks Liability Shift and EMV microchips is designed to reduce credit card fraud, which has been a serious problem for many U.S. merchants for decades. While it remains to be seen what effects it will have on fraud rates, this policy shift has sent many businesses scrambling to update their POS systems to newer versions that will support EMV.
There is still much confusion surrounding the liability shift, as many small business owners are wondering if they are being forced to adopt updated technology, or if it would be beneficial for them to do so. In actuality, the specifics of your business model and transaction base must be evaluated in order to determine if a complete upgrade is necessary. While certain companies will simply not be able to handle the liability shift if they fail to adopt EMV migration, many others may be content with a simple upgrade of their existing platform.
When to replace your POS system
One of the primary reasons to replace your POS system now is if you were already considering a change unrelated to EMV migration. If your current system isn’t meeting your needs, you may as well make the switch to an EMV compliant system now so that you can take advantage of the microchip technology when necessary.
Additionally, if most of your transactions occur with the credit card being present, you will most likely want to move to a new system designed to handle EMV transactions. These transactions are where the liability shift legislation is designed to prevent fraud. If your company receives a significant number of chargebacks, you may find yourself unable to handle the increased liability.
Mobile wallet technology is also gaining support among many consumers, and if you want to take advantage of this trend and offer a new convenience for your customers, replacing your POS system may prove fruitful. Many consumers may choose to switch entirely to mobile wallets in the near future, and if your store faces intense nearby competition, you may lose out by not adopting a new platform.
When to repair your POS system
Increasing numbers of organizations are completing all of their credit card transactions online. If your business model relies exclusively or even overwhelmingly on web-based credit card processing, you will likely experience more costs than benefits from replacing your POS system. The liability shift has no effect on these transactions since the credit card is not present at the time of purchase.
Even if you do process some credit cards in person, it still may not be worthwhile to upgrade before you’re ready. If you traffic in products and services that are already highly resistant to fraud or your risk of chargebacks is so insignificant as to not offset the costs of a new system, then you may be better off delaying the implementation of an EMV compliant POS platform.