EMV… is the sky going to fall?
Posted on September 14, 2017 by Miles Bodzin, DC
In practices like yours, we’re being told you HAVE to get the new EMV Chip PIN-Based credit card terminals, or you will now be liable to any fraudulent transactions. I’m sure we have all gotten the calls from merchant processors saying that we have to make the switch or else.
Oh my goodness, the sky is going to fall! I’m going to be liable!
Wait a second. Did you ever think to ask what you would be liable for?
A little background: The credit card industry is in a constant battle to combat fraud.
Whether it be from a lost credit card that someone uses to buy a TV on the internet all the way up to crime rings hacking computer systems to steal millions of credit cards, the credit card industry is in a state of constant fraud combat.
The credit card industry determined that the most significant area of fraud (40%), representing billions of dollars, comes from counterfeit credit cards. These are cards criminals create using stolen credit card numbers. If the credit card industry could merely reduce this type of fraud, almost half of all credit card fraud would stop.
Hence the purpose of the newer Chip-enabled credit cards. The Chip in the cards have millions of codes that are in use during a transaction. This Chip makes it impossible for counterfeits.
Think of it as the security features that are active in the printing of money. Those security features make it harder and harder for criminals to make counterfeits. The Chip does that for credit cards.
Examining where counterfeit credit cards are in use.
When someone has a counterfeit card, the odds are they’re going to use it one time to make a more significant purchase. For example, they’ll use it to buy an expensive piece of jewelry, a computer, or some consumer electronics. The likelihood they’re going to walk into your healthcare practice and pay for the service using a fraudulent credit card is pretty remote.
In fact, all of healthcare is considered a shallow risk market for counterfeit credit card use. So the odds of someone walking into your practice with a fake credit card is as common as someone stepping in to pay with chickens or wooden nickels.
But let’s say someone did pay for care in your office with a counterfeit credit card. What would happen? First, let’s review what would occur before the “requirement” to get an EMV terminal.
If the transaction were successful, you would get paid. However, in all likelihood, the merchant processing company would discover that this was a fraudulent charge. If you’ve ever had a patient report a card as lost or stolen, you may have experienced where the bank does a “chargeback.” The chargeback is where the bank will take back the funds that they already deposited into your account.
In essence, you were “liable,” and they took the money back. This is what would happen when the merchant company finds the fraudulent charge.
What has changed since the new EMV terminals became “required”?
Let’s pretend a patient walks in with a counterfeit credit card and pays. If you had the EMV chip terminal, the card would not be accepted or more likely; they would not use the card.
If you did not have the EMV terminal and the card was accepted, you would get paid. But again, the merchant company would later issue a chargeback and pull the funds from your bank account.
In both scenarios where the fraudulent card was used (before and after the new “requirement”), with or without the EMV terminal, the merchant processing company issued a chargeback and took the money back from you. Did you get that? The liability, where the money was taken back, is the same. There is NO new liability.
You see, the merchant companies have been saying “You will be liable if you don’t use EMV” as if it was some new liability that should have worried you. I have news for you, you have ALWAYS been liable for fraudulent credit card transactions.
There is No New Liability!
This message the merchant companies are using that implies there’s some new liability merely has been a scare tactic being used to get businesses like yours to spend money on a new piece of equipment.
Now, I understand why the credit card companies want you to do so, to stop counterfeit credit card fraud. But as I outlined earlier, the odds of it happening in your practice are almost impossible. So if you want to spend the money to get a new credit card terminal for EMV, that’s your choice. However, at least at the time of this publication, it is 100% optional. It is not a requirement to do so!
If you decide to get an EMV enabled credit card terminal, be sure to read the article, Jenny Was Caught Stealing From You! The dangers of stand-alone credit card terminals. In it, I talk about why you want to make sure the credit card terminal you use is NOT a stand-alone machine and why you need to make sure it only works through a secure software program that allows you to control refunds and who is and isn’t allowed to do them. Almost all the credit card terminals I see for sale are stand-alone terminals where you can quickly run refunds that enable people to use your terminal as a personal ATM!
So is the sky falling?
Those of you reading this article should know that I am a part of a company that offers credit card processing as part of our software suite at Cash Practice Systems. Unlike every other company providing credit card processing to chiropractors, we took the position to educate our clients that you don’t need to invest in this new equipment.
The sky is not falling. In fact, we saw marketing letters from chiropractic’s largest malpractice insurance carrier attempting to scare their doctors into buying these terminals. As I said earlier, you are not required to purchase these, so don’t fall victim to those out there looking to scare you into buying one. To watch a recording of a webinar we did on this topic, go to my EMV Webinar.