The Important Law Change Affecting Small Businesses
Today a new law goes into effect that may change the nature of your business if you accept credit cards. This major change in credit card liability is impacting small businesses across the U.S. Even if you don’t accept credit cards on a regular basis, it’s still important to know in case you plan to do so in the future. Beginning today, October 1, 2015, a new law requires credit cards to have special chips that enable PIN numbers. The credit card companies are already issuing these, and you might have even received one.
Here’s the catch – businesses must get new credit card readers by today. What happens if you don’t switch to the new readers?
You know how credit card companies will take a fraudulent charge off your bill? That’s because they accept liability for security and have to eat the costs if someone fraudulently uses your credit card. However, if a business does not switch to the new card readers by October 1, then that business takes on the liability for fraudulent charges instead of the credit card company.
In other words, if you sell something and it turns out that purchase was fraud, then you’re not getting paid. This will hit retail shops and restaurants especially hard since they make lots of transactions.
Small Businesses are at Risk
A recent study found that nearly two-thirds of small businesses were not ready for the October change, so I wanted to make sure you were aware. It’s a potentially very large burden for a business to take on and could really affect the bottom line. Fraudulent credit cards are expected to amount to $3.6 billion in losses this year. Victims include about 10% of all U.S. small businesses. Not only are you losing a percentage of each sale to the credit card companies, but they’re not even taking on the risk of fraud any more.
What should you do?
Get a new credit card reader ASAP. Intuit, Square, and CapitalOne all sell the new card readers. At one point, Square was offering a limited number of free ones, but I’m not sure if that is still happening. And share this post with anyone you know that processes lots of credit cards and might be at risk.