The Forgotten EMV Deadlines
LONG BEACH, Miss. -- Europay, MasterCard and Visa (EMV) guidelines regarding when responsibilities for fraud will shift from debit and credit card providers to merchants have been well publicized. Most convenience store retailers are now aware that they must upgrade their in-store point-of-sale terminals by Oct. 1, 2015, and at the pump exactly two years later to avoid accountability for fraud taking place at their stores.
However, there are two other less-publicized EMV responsibility shifts set to take place regarding ATM machines. On Oct.1, 2016, the liability shifts to ATM owners for fraud committed through any MasterCard debit card. And on Oct. 1, 2017, the liability shifts to ATM owners for fraudulent transactions completed on any Visa debit card.
Most ATMs housed in convenience stores are owned by the operator, not leased via a third-party company, James Phillips, vice president of sales and marketing for Long Beach, Miss.-based ATM manufacturer Triton Systems of Delaware LLC, told CSNews Online. Even though retailers have more than three years to upgrade their ATM machines, they should look to do so now, he advised.
"There are about 225,000 retail ATMs in the United States," he said. "More than 99 percent of them are going to need an upgrade so they can support chip and PIN. If everyone waits until the last minute, manufacturers will get backlogged to the point where retailers won't get their upgrade kits to make liability shift dates. It's very hard to cram 10 years of demand into two years."
For c-store retailers that are opening new locations or have already decided to purchase new ATMs, EMV card readers can be purchased instead of conversion kits, according to Phillips.
"It's about a $250 to $300 option," he said. "It doesn't make sense to buy a new machine now and not opt for that card reader. It's much less expensive to get it on the front end than to buy a kit down the road and pay for a technician to do the installation."
EMV is a set of guidelines, not regulations. Hence, retailers will not be forced to upgrade their ATMs by the given dates. However, it they don't do so, the responsibility shift could be massive if and when fraud occurs at their stores.
"If a retailer [suffers from] fraud after the date comes and goes, it can be a really bad situation," said Phillips. "Smaller retailers could be forced out of business and somebody would have to settle fraud claims."
In fact, in other countries where EMV is prevalent, credit and debit card processors have decided in some instances not to process payments for retailers that did not upgrade to an EMV-capable ATM.
"I'm not saying this will happen in the U.S., but in Canada, we've seen processors simply shut terminals off and decline transactions after the liability shift date," Phillips noted.
EMV is already prevalent in 120 countries. The United States is the only developed country in the world that has not yet implemented EMV guidelines. The Triton executive cited the massive number of financial institutions in the country as a main reason for the slow adoption of EMV guidelines in the U.S. compared to other nations.
Because EMV is not the norm in the U.S., ATM owners have a huge bull's-eye on their backs — another reason to upgrade to EMV-compatible machines now, said Nancy Lewandrowski, Triton's marketing manager. "Because the U.S. is the only major country that hasn't switched, we have become the target for all of the skimming fraud," she said.
For operators who still want an extra nudge before buying new or upgraded ATMs, a bevy of emerging ATM technologies can potentially enhance retail sales. For instance, touchscreen capabilities with electronic receipts is one new technology found on the latest ATMs.
"People often just use ATMs for cash," Phillips said. "But having customers' e-mail addresses or texting information will open the door for retailers to do more marketing than ever before."
The ability to dispense non-denominational gift cards is another function ATMs will soon have. "This will allow retailers to simply purchase a gift card that has no set dollar amount on it," Lewandrowski said. "Previously, ATM owners were basically holding their own cash in an ATM hoping someone would purchase that particular gift card."