Three letters are about to change the way you do business: EMV, a chip banks are using to replace the faulty magnetic strip on ATM and debit cards. The EMV chip—which, by the end of 2015, will be used on 70 percent of U.S. credit cards and 41 percent of debit cards, according to Aite Group—are aimed at eradicating fraud.
So, why should tour and activity operators care about this change? Well, the "liability shift" is coming up on October 1, 2015. Whereas credit card companies are currently responsible for reimbursing consumers when fraud occurs, you'll be on the hook after October 1.
In order to make the best decision for your company, here's a closer look at how chip credit cards work and what this means for your tour and activity business.
How EMV Chip Credit Cards Work
Up until a few years ago, credit card account holders were issued a card designed with a magnetic stripe, which is swiped through a credit card reader to process the transaction.
Today, credit card holders are receiving an EMV card or 'smart chip' card. EMV stands for Europay, MasterCard, and Visa—the companies that have developed a microchip that appears on the front of the card. These microchip-embedded cards are designed to improve payment security. Whenever the card is used, the microchip generates a unique authentication information, which credit card companies claim is nearly impossible to duplicate.
The one drawback: The new technology also ensures that EMV cards only work with special credit card terminals and readers. Instead of swiping the magnetic stripe through the reader, the microchip-embedded portion of the card is placed into a machine so that the data from the chip can be read and the transaction authenticated. The card stays in the reader during the authentication process. Merchants accepting chip cards have two options for authenticating the transaction. They can either have the machine read the card and require the cardholder to sign a receipt or have the customer enter a PIN code—just as they would with an ATM or debit card.
Making the Switch to Accepting EMV Chip Credit Cards
To be clear, the choice to update your system to accept EMV chips is completely voluntary. But, you need to weigh the pros and cons.
Accepting EMV cards is slightly different from traditional credit cards (though, if you don't upgrade your system, EMV cards still come with a magnetic swipe, so you'll still be able to accept credit cards), it may offer a few benefits to tour and activity business owners.
First, merchants accepting payment on a smartphone or other mobile devices can use a mobile EMV chip card reader to process transactions more securely. So, tour and activity businesses accepting walk-ins will be able to take payment for bookings without risk of credit card skimming.
Perhaps the biggest boost to your business, though, is then increased customer confidence in your business—especially for those who may hesitate to use a credit card as a form of payment. More importantly, though, that increased data security will prevent fraud from occurring. And, since your business will now be on the hook for any reimbursements, this could save you potentially thousands of dollars in liability should fraud occur. Take it from the U.S. Small Business Administration, which in a recent webinar stated, “To ensure your business is fully protected from all EMV-related fraud liability, it must upgrade to an EMV-compatible terminals so that you can accept chip cards."
The downside to consider, though: The EMV migration will require investing in a new credit card processing terminal and software programs. While Merchant Maverick reports that the average EMV chip card reader costs about $200 and merchants can find refurbished models for as low as $150, this cost are higher for small tour and activity businesses, which won't benefit from lower prices with bulk orders. Another option, though, is renting a terminal, which can cost about $100 or less per year.
As of June 2016, ZOZI customers can accept EMV chip-enabled payments with a free ZOZI Chip Card Reader.
Also, the card reader is just one part of the larger equation. To go along with the new reader, merchants will also need to update their software systems, which can run anywhere from a couple hundred dollars to a thousand. And if your company doesn't have a designated techie—add on another couple hundred for a tech consultant to install it and insure it's functionality. As you can see, the price tag for the new system can rise quickly.
ZOZI customers will not need to update their ZOZI app to accept payments when they use ZOZI's Chip Card Reader.
EMV chip cards are the wave of the future for business in the U.S. The increased security leads to more consumer confidence, which all tour and activity businesses can benefit from. And with the liability switch just months out, it's time to start weighing your options, and deciding if updating your system is the right fit for your business.
Using an online booking system, such as ZOZI Advance, is just one way to streamline many of your day-to-day operations. Take things to the next level with a mobile app that syncs with the system to deliver better customer service and keep track of essential customer data from any location. A mobile app can help staff members stay plugged into your business without having to return to a desktop computer.
If you're looking for a great mobile app for tour and activity operators that will lower your business' fraud risk, ZOZI just released the industry's first EMV chip compatible mobile app for tour operators. Email firstname.lastname@example.org or call (888) 611-9694 for more information about the ZOZI Advance mobile app.