Beginning in October 2015, there will be new consequences that merchants face if their credit card data is breached due to the liability shift.
Recently, credit card data breaches have been a hot topic in the news, and the consequences merchants face if their credit card data is breached can be quite costly. Obviously, for merchants like Target, this is definitely not the publicity that they want. Surprisingly, smaller businesses may be more at risk and have more to lose from such a breach.
Risk to Small Businesses
Though small businesses may not believe they have anything to worry about, they actually may be more of a target due to their lower security standards. A USA Today article stated, … “A Ponemon Institute survey for insurer Hartford Steam Boiler found that 55 percent of small businesses had a data breach and 53 percent of those businesses had multiple breaches.”
Cost to Small Businesses
But what does this cost small businesses? According to this article, the costs of notifying these customers of the breach (which is required by law) usually is well over $10,000. What makes it worse is that standard insurance does not cover this loss, which is why a data breach insurance policy is now necessary to protect businesses.
New Requirements to Use EMV
Beginning in October 2015, everyone will be required to use EMV (Europay/Mastercard/Visa), and there will be new consequences merchants face if their credit card data is breached. Instead of a magnetic-strip which is used in the United States, EMV actually uses a chip. This has proven to be quite effective outside the United States. According to a recent article in Rental Management, “EMV has real numbers behind its effectiveness. In Canada, for example, it has been reported that credit card fraud fell from $142 million in 2009 to $38.5 million just three years later after the introduction of EMV.”
Consequences of Not Using EMV
In addition to the costs of notifying customers of breaches, any merchant not using EMV after the deadline will be responsible for the additional costs associated with any credit card breaches. While there is cost involved with switching to EMV, there is a potentially greater cost with not switching.
To find out more information about EMV chip cards and the liability shift, click here.