Churches need to assess exposure to new liability rules
October 1, 2015 is an important deadline for churches and nonprofits that do face-to-face ("card-present") credit or debit card transactions.
EMV (an acronym that stands for founders EuroPay, MasterCard and Visa) is a payment standard that is based on "smart" debit and credit cards with embedded microprocessor chips. The chips and the information they generate enhance card authentication, cardholder verification, and transaction authorization processes, making these cards less vulnerable to fraudulent use
The standard has been in use in most of the rest of the world for some 20 years. It is now being adopted in the U.S., where card issuers are now in the process of introducing smart cards that have the EMV chip. Meanwhile, multiple manufacturers are busy bringing new card-swipe devices that can process EMV transactions to market.
This massive transition is being accompanied by an important change in who pays the bill for fraudulent transactions.
Right now, if a counterfeit, stolen, or otherwise fraudulent card is used in a card-present transaction, liability for the amount of the fraudulent charge lies with the credit card issuer.
As of October 1st, 2015:
That all changes on Oct. 1, when liability for fraud shifts from credit card issuers to merchants/organizations accepting card-present payments that are processed with devices that are not EMV-enabled, if an EMV "smart" card is used for the purchase.
This means that if somebody presents you an EMV-enabled card, and you process it as a traditional swipe transaction on a device that is not capable of processing it as an EMV transaction, you as the merchant-of-record are liable in the event of fraud, according to David Eschen, vice president of Product Strategy of Atlanta-Georgia-based Vanco Payment Solutions, a provider of electronic giving options to more than 15,000 faith-based organizations.
EMV is not a mandate," Eschen explains. "You can continue to operate with the swipe but you have to be aware that there is a fundamental shift of liability for fraud in card-present transactions."
Churches need to be assessing their card-processing devices, including everything from giving kiosks to iphone "dongles" (such as Square or PayPal Here), in order to determine whether they should upgrade to EMV-capable devices in advance of the Oct. 1 changeover, says Eschen.
"As this deadline is coming up quickly, we are working with our vendors to provide necessary equipment, as well as the training and education for our clients," Eschen says. To that end, Vanco is launching an "EMV Central" section on its website, he reports; more information is also available on the Vanco blog, at http://blog.vancopayments.com/what-is-emv-and-how-does-it-affect-electronic-payments.