Accepting Payments? Here are Five Payment Terms you NEED to Know NOW

Unless your business strictly operates as a cash-only firm, chances are you’re accepting credit card payments in one form or another. Significant changes are taking place during 2015, and to ensure your business isn’t placed at risk, it’s in your best interest to become familiar with these five payment terms.

Security is important. Goes without saying that safeguarding your customer’s data is vital to continued success. Note the recent data breaches involving stores such as Target, Home Depot, or Michaels Crafts Store, which allowed millions of customer’s data to be leaked. In an effort to increase security, the United States has mandated the phasing out of magnetic-stripe cards in favor of more secure options. Which brings us to our first term:

You are likely very familiar with these cards, the run of the mill credit and debit cards. These are the same cards we have been using for the past few decades (about 40 years or so). While convenient and familiar, the technology is outdated and easily manipulated by those seeking to steal your identity. As previously mentioned, the U.S. is phasing out these magnetic-stripe cards and adopting a more secure option. Which brings us to the second term, EMV and chip cards.

EMV “Europay, Mastercard, and Visa” cards are quickly becoming the standard credit card processing avenues in the U.S. EMV cards (also known as chip cards) are tougher to counterfeit than magnetic-stripe cards. This added level of security is good news for us consumers, and business owners alike. Payment information on these cards is saved on the chip itself, secured, and utilizes an authentication method with the point-of-sale terminal.

Liability Shift

So why is this important to your business? Businesses big and small will need to incorporate a new card reader to accept these new cards. If your business does not update its payment processing to an EMV compatible solution, effective October 2015, liability for any fraudulent card use defaults to your small business. This is not good news for those caught unprepared.

Currently, liability is absorbed (in most cases) by the bank. After October 2015, the liability is passed to us small businesses. Read this article by the Wall Street Journal discussing the liability shift in more detail.

NFC/contactless payments

Near Field Communication (NFC) or contactless payments are payments that require no contact between your POS terminal and your customer’s device (smart phone or credit card/EMV chip card). NFC payments are convenient and safe because the transactions are encrypted between the payment device and the POS terminal, preventing third parties from stealing or hacking the card information. No two transactions are the same, and as such, the card information cannot be stolen and re-used (making a duplicate and fraudulent card).

Apple Pay

The ‘newish’ payment on the block is also a very popular one, as iPhones continue to break records for units sold. As such, Apple Pay– an NFC/countless payment option- allows consumers to pay utilizing their smartphone. Apple Pay takes your credit card info (the phone owner adds the credit card info), encrypts it, programs it into the phone, and allows payment through biometrics. Selected iPhones are able to read your fingerprint ID and authorize the payment.

Comments?

Thanks for reading and please let me know, Do you have any experience using non-magnetic stripe cards or any of the payment options listed above? What has been your experience? As a business owner/manager, have you adopted a secured option? Do you have any additional suggestions to add?

Feel free to comment below or hit me up on twitter.

~Viva