Prepare for a shift in credit card fraud liability
The ritual of "swiping and signing" as a form of payment may soon decline—and small-business-owner doctors need to be aware of new equipment, cards and changes to fraud liability that are coming.
A payment system known as EMV—which stands for Europay, MasterCard and Visa—will roll out in the United States in October. The system uses microchips rather than magnetic strips. In this system, cards will be put into slots rather than swiped, and though card users will still be signing for the time being, the system will enable users to set up a PIN number, if desired.
The good news about the EMV system is that it aims to prevent fraud. The concerning part for small-business owners is the shift in liability that will accompany the system switch.
Put in simple terms, when a credit card is used fraudulently, issuing card companies have to determine who is liable—the merchant or the bank. When the liability shift happens on October 1, the party with the lesser technology will bear the liability if there is an incidence of fraud.
In other words, though accommodating the EMV system of payment isn't strictly mandatory, if a business owner is using older equipment and fraud occurs, the liability likely lies with the owner. It's essential for doctors who own and operate small businesses to be aware of the shift and consider investing in new equipment.
Payment brands will be enforcing a chip liability shift starting October 1, notes Deanna Karhuniemi, VP of EMV Strategy for Chase—an AOAExcel® Endorsed Business Partner—who reiterates that migration to EMV is not mandated but is worth considering.
"The migration to EMV is a choice, but it is in [small-business owners'] best interest, in order to protect their transactions. If not, the switch could ultimately hurt their bottom line, if they have to absorb the costs for fraudulent transactions," says Karhuniemi.
There are resources available to small-business owners and their staff—outlining how to unpack the new terminals, perform chip transactions and settle transactions; and what to do when a chip card is presented—at gochipcard.com.
Members can access new, template appeal letters to assist in payer denials and patient communications, as well as attend an #AskAOA webinar on addressing payer clawbacks and denials.