I dinner last night with a colleague who told me that she thought that the EMV discussions were in her words, a giant boondoggle, much like Y2k.
For those of you living in caves, Y2K was a huge problem that was going to cause dams to burst, airplanes to fall from the sky and the complete destruction of the American electric grid. The problem was that computers were supposedly not prepared to handle the year 2000 in their rusty innards. Billions were spent on the problem. In the end, nothing happened. It was a nonevent event.
So what about EMV. We are told that if you don’t upgrade your credit card accepting equipment, on October first the liability for fraudulently used cards will enure to you, the merchant and you will be heading for the poor house because of all those chargebacks.
So what are the facts:
Visa cards are moving the liability for only those cards that have been duplicated or counterfeited. MC, Discover, and Amex are also shifting liability for lost of stolen cards.
This covers only those cards that are presented at a terminal, not those numbers that are stolen from Target and used over the phone. You are going to hear about pin preferring cards, signature preferring cards, and more. Its complicated, and depending on who you talk to, even within the card industry, you may get different answers. Oh, and be sure the PARCS vendor you talk to has the proper equipment, the right approvals, and by the way, have they considered PCI implications?
So should I be quivering in my boots? Should I mortgage the house and put the kids on the street to cover the costs of upgrade? Did you consider your liability? In other words, what are the odds that a lost, stolen, or fraudulent card is going to be used at your place of business.
I have been told that the probable liability for our industry is one basis point. That ‘s one one hundredth of one percent or if you do 1,000,000 in credit card business you liability would be what $100? I was off the record when I got that info, so I can’t tell you who told me, but if you find me at the IPI show I might slip some hints.
But assume that it was 10 times that, or even 100 times that. How does that compare to a system upgrade? This is where you have to decide.
I’m in Vegas right now. Let’s say I’m sitting at the table, the dealer has a 10 showing, and I have a 6, What are the odds there is a 10, 9, 8, or 7 in his hole card. Pretty high, so I must hit. However what are the odds thousands of $10 transactions are going to be fraudulent? That little fact is up to you.
So is now the time to panic, after all, you have know about then for two years but have done nothing? I would say that you should consider your liability. Also, will you sleep well at night.
My suggestion — talk to your PARCS vendor. Find out the true cost to upgrade. Get the facts — compute your liability. Then make an informed decision.
Want to talk — talk is cheap and I don’t charge. Come by booth 220, have a water on us, sit and chat. Maybe I will learn something.
JVH
