EMV: Is the Sky Going to Fall?
PRACTICE
MANAGEMENT
Miles Bodzin
For practices like yours, we’re being told you have to get the new chip PIN-based credit card terminals, or you will now be liable for any fraudulent transactions. I’m sure we have all gotten the calls from merchant processors saying that we have to make the switch. 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 would you be liable for?
A Little Background
The credit card industry is in a constant battle to combat fraud, whether it is from a lost credit card that someone uses to buy a TV on the Internet or crime rings hacking computer systems to steal millions of credit card numbers.
The credit card industry has determined that the largest area of fraud (40%), which represents billions of dollars, comes from counterfeit credit cards. Criminals create these cards using stolen credit card numbers. If the credit card industry could simply reduce this type of fraud, almost half of the fraud would be stopped in its hacks.
Hence the purpose of the newer chip-enabled credit cards. The chips in the cards literally have millions of codes that can be used during a transaction and make it impossible for counterfeits. Think of it like the security features that aie used in the printing of money. Those security features make it harder for criminals to make counterfeits. The chip does that for credit cards.
Now, let’s examine where counterfeit credit cards aie used. When someone has a counterfeit card, the odds are that they’re going to use it one time to make a larger purchase. For example, they’ll use it to buy an expensive piece of jewelry, a computer, or consumer electronics. The likelihood that they’re going to walk into your chiropractic office and pay for their adjustment is pretty darn remote. In fact, health care is considered a very low-risk market for counterfeit credit card use. So the odds of someone walking into your practice with a counterfeit credit card ai e as common as someone walking in to pay with chickens or wooden quarters.
Let’s say that someone did pay for care in your office with a counterfeit credit card. What would happen? First, we’ll review what would happen prior to the “requirement” to get an EMV (which stands for Europay, MasterCard, and Visa) terminal. If the transaction were successful, you would be paid. However, in all likelihood, the merchant company would discover that this
“In both scenarios, when the fraudulent card was used (before and after the new “requirement”), with or without the EMV terminal, the merchant company issued a chargeback and took the money back from you. J J
was a fraudulent charge. If a patient has ever reported a card as lost or stolen, you may have experienced when the bank does a “chargeback,” or when 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.
Now let’s review what changed after the new EMV terminals became “required” equipment. The patient walks in with a counterfeit credit card and pays. If you had the EMV 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 be paid, but, again, the merchant company would later issue a chargeback and pull the funds from your bank account.
In both scenarios, when the fraudulent card was used (before and after the new “requirement”), with or without the EMV
terminal, the merchant company issued a chargeback and took the money back from you. Did you get that? The liability, where the money was taken back, is exactly 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 there is some new liability you should be worried about. I have news for you, though. You have always been liable for fraudulent credit card transactions.
By issuing this message, merchant companies are implying that there’s some new liability, but it has simply been a scare tactic 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 fraud. But, as I outlined earlier, the odds of it happening in your practice are, for all intents and purposes, 0.00000001%. So if you want to spend the money to get a new EMV credit card terminal, 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 I wrote titled, “Jenny Was Caught Stealing from You.” 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 allowed to do them. Almost all of the credit card terminals I
see being sold aie stand-alone terminals where you can easily run refunds that allow people to essentially use your terminal as a personal ATM machine.
Now, most of you reading this article know that I am CEO of a company that offers credit card processing as part of our software suite. Unlike every other company offering credit card processing to chiropractors, we took the position to educate our clients that they don’t need to invest in this new equipment. The sky is not falling. In fact, we saw marketing letters from one of chiropractic’s largest malpractice insurance carriers attempting to scare their doctors into buying these terminals. We easily could have taken that same position using the same scare tactics and sold a ton of EMV machines at a handsome profit. As I said earlier, you aie not required to purchase these, so don’t fall victim to those out there looking to scare you into purchasing one.
Miles Bodzin,DC is founder and CEO of Inc. 5000-listed company, Cash Practice® Systems Learn more atwww.CashPractice.com or call 877-343-8950. To book Dr. Bodzin for interviews and speaking, call 877-343-8950, ext. 201. To watch a recording of a webinar we did on this topic, visit: http://www.bodzin.net/EMVWebinar.
