Only 42% of small businesses plan to update their terminals to EMV by the October 2015 liability-shift deadline, according to a new survey from Intuit, suggesting that more than half could soon find themselves on the hook for losses due to fraudulent cards used in their stores.
Businesses that are undecided or are not planning to upgrade are also largely in the dark about what that means, according to the survey. A whopping 85% said they're unaware of the financial and legal liabilities they'll be responsible for starting in October. About 86% said they might not be able to handle the financial and legal liabilities for fraudulent card transactions, however.
"The biggest barriers for small businesses to become EMV compliant are cost and lack of time or resources required to research terminals," Eric Dunn, Intuit's senior vice president for payments and commerce solutions, said.
The average annual spend on POS systems, including upgrades, rental, maintenance and other fees, was about $189 for the small businesses in the survey. Businesses with fewer than six employees spent the least – 65% paid less than $100 a year.
Another big barrier, however, appears to be education. Just over one-third (37%) of small business owners had not even heard of EMV cards, the study said. For companies with fewer than six employees, that number rose to 54%.
Almost half (48%) of small business owners in the survey were not aware of the liability shift; that number rose to 59% for businesses with fewer than six employees. And 81% of the businesses in the survey didn't know what the deadline is. Nearly half (45%) of small businesses, including those that will migrate to EMV, believe they'll still be liable for exposed customer data, fraudulent transactions or exposed card data after they migrate.
Card processors should be the biggest source of information to help business owners understand EMV, the respondents said. About half also said they're looking to issuers and financial institutions for more information about EMV. Notably, 41% said they would appreciate video tutorials to educate themselves on EMV.
Though 56% of sales for the small businesses in the survey were done via debit or credit card, one in five businesses didn't know what percentage of its annual card transactions might be fraudulent. Of the ones that did know, 7% were fraudulent on average, though that was as high as 16% in companies with 51 to 100 employees, according to the survey. Expired cards were a third of the card fraud, followed by stolen cards (19%) and identity theft (14%).
The survey, done for Intuit by research firm Ebiquity on April 22 to 27, 2015, included 504 U.S. small businesses at the owner or manager level with 1 to 100 employees. All respondents accepted credit cards through mobile swipers and/or physical point-of-sale terminals.
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