April 6, 2015
Notice to Firearms Retailers: Important Credit Card Processing Changes Coming
In order to provide additional and enhanced credit card protection for consumers, credit card companies will soon implement new rules that will change the way credit and debit card transactions will be processed. All major credit card companies are issuing new EMV (Europay, Mastercard and Visa) cards or “smart cards” that contain embedded microchips that provide transaction security features and other capabilities not possible with current, traditional, magnetic stripe cards. (Note: Smart cards are not new. They have been around a long time and most of the world has already migrated to EMV technology. The United States is one of the last countries to do so.)
The biggest benefit to be realized from smart cards will be the reduction in card fraud resulting from counterfeit, lost and stolen cards. EMV technology supports enhanced cardholder verification methodsand, unlike magnetic stripe cards, EMV payment cards can also be used to secure online payment transactions.
What do the New EMV Cards Mean for Firearms Retailers?
Starting October 1, 2015, credit card companies like Visa, MasterCard, Discover and American Express will begin shifting liability for fraudulent credit and debit card transactions to card issuers and merchants. For firearms retailers, this liability shift means that those merchants using non-compliant EMV credit card payment devices and who accept transactions made with EMV-compliant cards assume liability for any and all transactions that are found to be fraudulent. MasterCard defines the liability shift this way: The party, either the issuer (the financial institution who issued the credit card) or merchant, who does not support EMV, will assume liability for counterfeit card transactions.
A vital first step for firearms retailers to take now is to install new credit card processing terminals that are capable of processing smart cards. To ensure that liability for credit card fraud does not fall on your location, you will need to have these terminals in place and functioning before the October 1, 2015 deadline. NSSF Members should contact PAI (Payment Alliance International) or Celerant, as both of these NSSF affinity companies can assist retailers in making sure they are compliant with these rules.
How Do I Receive My New EMV Card Processors?
Contact a representative from credit card processing company and talk to them about this upcoming change. They will advise you on what hardware changes you need to make, as well as applicable upgrade costs; costs will vary based on your credit card vendor and card reader brand. You should also ask your credit card processing company how they want you to dispose of your old card reader equipment once you’ve completed installation of your new hardware. (Note: New card reading hardware will continue to read the old magnetic strip cards, but you should discuss with your cardholder processing companies the ramifications for fraudulent use resulting from charge processing of these cards.) Finally, once you receive your new equipment, make sure you’ve implemented its use by the October 1, 2015 deadline.