Protect Your Small Business Against Credit Card Fraud

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SBA Nebraska District Office

By Patricia Brown-Dixon, Region VII Administrator of the U.S. Small Business Administration

You’ve probably heard of people stealing, buying and selling credit card information.  You don’t want your business to be the victim of such a transaction. But on any given day, your small business is now vulnerable. 

The cardholder’s issuing bank previously took care of these situations.  Previously. 

That’s the way it used to be.  Now your small business could be the one that is liable--not the issuer.  Starting October 1, the rules changed for Europay, Mastercard and VISA (EMV) cards.  Now, there are “chip cards”, and U.S. credit card companies set October as the deadline for the national adoption of their new chip cards.  So, if you have not integrated EMV technology that processes chip cards, your business will now become financially responsible for fraudulent transactions previously covered by the cardholder’s issuing bank. 

Why are credit card companies taking this route?  Roughly 90 percent of credit card terminals in Europe are chip-enabled.  According to Barclays, the United Kingdom has seen nearly a 70 percent decline in counterfeit card transactions since making the transition. Meanwhile, America has 25 percent of the world’s credit card use, but 50 percent of the world’s credit card fraud,  and that’s enough reason for card companies to demand a shift from antiquated swipe-and-sign to microchips on credit cards. 

The U.S. Small Business Administration (SBA) is concerned that many U. S. entrepreneurs are still in the dark about this change.  It is estimated that about 20 percent of our nation’s payment terminals are currently equipped to accept chip cards, but most of these are at larger retailers. This means the majority of America’s small businesses will need to upgrade their payment systems as soon as possible. Depending on the cost of the goods and services that a small business sells, being held liable for fraudulent card use could have serious financial consequences.

Most small businesses can’t afford their own fraud departments and definitely can’t afford to be behind the curve while large competitors move forward with technology upgrades. That’s why the SBA has partnered with Square to educate small businesses about how to increase your payment security and to protect cardholder information. Visit the SBA website to read all about the change to EMV (Europay, Mastercard, Visa) cards and what you need to do. You can learn how to prevent risk and protect both you and  your customers against credit card fraud and the liability that comes along with it.