The liability shift went into effect on October 1, 2015. If you’re a small business owner, it’s understandable to be a bit freaked out about all of this. Not only do many articles on the subject make the liability shift seem like doomsday, it can also be a bit confusing to understand what exactly is changing.
But there’s no reason to lose any sleep. We’re here to make the liability shift as simple and painless as possible for any business of any size — not just those with a huge infrastructure to take care of all the details. Here is a step-by-step guide for preparing your small business for the liability shift. The good news is that really, it’ll only take a little bit of time out of your day — and you’ll come out of it all set up to accept the most secure, authenticated forms of payment.
Step 1. Learn what’s actually happening with the liability shift (and why it’s a good thing).
Here’s the short story: Starting on October 1, you could be held liable for certain types of fraud (specifically, in-person counterfeit EMV fraud) if you aren’t set up to accept EMV. Chip cards are well on their way into the mainstream (chances are you’ve received one from your bank already). And your customers will soon expect to be able to pay with them — because they’re leagues more secure than the magstripe cards that the banks are phasing out. (You can read more about EMV technology in our EMV learning center).
The shift to EMV is really a nationwide “we’re all in this together” initiative towards reducing fraud. In other countries that have adopted EMV (the U.S. is actually really late to the party on this one), certain types of fraud have plummeted. The banks are issuing new chip cards (no small feat) and sellers are being asked to do their part by getting set up to accept them.
The liability shift is meant to accelerate this effort. While the liability shift isn’t actually a law (read more myths about the liability shift here), it’s still a good idea to upgrade. The wider (and faster) we adopt more secure forms of payment, the quicker we’ll work to reduce fraud in this country.
Step 2: Get your hands on an EMV reader.
The good news is that Square is making the shift to EMV as easy and affordable as possible for small businesses. The Square contactless and chip reader (which also accepts NFC payments like Apple Pay) is just $49.
What’s more, you won’t need to purchase any additional hardware if you order the Square contactless and chip reader. The new reader just sits on your countertop—and you can still use your current Stand and Reader to take magstripe transactions. You won’t need an additional PIN pad either — our new reader only requires a signature to complete a transaction (just like today).
Step 3: Learn how to accept chip cards.
Chip cards are actually processed differently than magstripe cards (hence the need for a new reader). They’re dipped vertically, chip side down, instead of swiped horizontally, like magstripe cards. Chip cards still contain a magstripe on the back, so it’s a good idea to inspect cards coming across your counter to make sure you’re processing them as an EMV transaction if they have that capability.
What many people don’t realize about EMV transactions is that they actually take a bit longer than magstripe transactions. The card stays in the reader for the entirety of the transaction (several seconds) so the technology can verify that the card checks out. (You can read more about chip card security technology here).
Because EMV transactions take a bit longer, they’ll likely accelerate the adoption of NFC (or contactless payments). NFC payments (like Apple Pay) take only seconds and are just as secure as EMV transactions. The Square contactless and chip reader accepts both EMV and NFC payments.
And there you have it. A few simple steps, and there’s nothing to worry about for the liability shift and the transition to EMV and NFC. We’re here to make sure your business is ahead of the curve with the latest technology to process any form of payment securely.
6 Myths About the Liability Shift
How to Protect Your Business — 6 Best Practices
A Simple, Affordable Way to Get Apple Pay for Your Small Business