Card Not Present Fraud , Fraud Management & Cybercrime

Is EMV Bad News to Small Businesses?

NACS Attorney on How EMV Is Crippling C-Stores, Small Merchants
Is EMV Bad News to Small Businesses?
Doug Kantor, National Association of Convenience Stores

This week, the House of Representatives Small Business Committee held a hearing to discuss the EMV fraud liability shift, and how it is impacting small businesses. Doug Kantor, lead legal counsel for the National Association of Convenience Stores, says the hearing brought many EMV shortcomings to light, namely the poor job card brands have done at leveling the migration field for all merchants.

In response to the hearing, NACS provided a statement to the committee pointing out that the average convenience-store operator will spend $26,000 per store to complete its EMV migration. That investment totals more than half the typical c-store's annual profit, Kantor says.

"It's [the EMV migration] putting a major financial and operational burden on them," Kantor says in this interview with Information Security Media Group. "The cost of migrating to EMV, according to NACS studies, is about $26K per store, or $3.9 billion just for this industry alone. And the National Retail Federation says it's about $30 billion for merchants overall."

Moreover, EMV is an investment that's not really going to benefit the merchant, he argues. "It's a huge, huge investment to switch to EMV. And if you don't do it, it's going to cost you money, because the card networks, Visa and MasterCard, are going to push more and more fraud liability onto you," Kantor says. "This industry already takes up the majority of fraud that happens at their stores."

C-store operators and other small businesses know they will eventually have to make the switch to EMV, Kantor says. The big challenge now, he explains, is finding equipment and qualified inspectors who can certify their systems and EMV implementation.

Even those small businesses that are ready to move forward are at the mercy of POS vendors and networks, Kantor adds.

"You need not only to buy expensive hardware for your store to read the EMV card transaction, but, more importantly, you need that hardware to be programmed the right way," he says. "And because every business in the United States that takes cards is being pushed into this transition all at the same time, what happens? Everybody that can do that software programming is busy doing that for someone. Small businesses are at the end of some very long lists, trying to get that programming help they need. And then they're at the end of some very long lists trying to get the major card networks - Visa, MasterCard, American Express, Discover - to certify them. They all require that they come in and certify your system before you can get it up and running."

Small businesses, which have the lowest transaction volume, get pushed to the bottom of the list, Kantor says, while larger merchants get the card brands' and POS vendors' attention first.

During this interview (see audio link below photo), Kantor also discusses:

  • Why Visa's and MasterCard's rollouts of EMV have favored the banks and big merchants;
  • Why the House committee's hearing was a positive step for small business;
  • Who should be taking the lead to ensure small businesses understand the impact the EMV fraud liability shift will have on their bottom lines.

Kantor provides governmental advocacy, strategic advice and legal counseling services to a range of clients before the congressional and executive branch agencies. He advocates for clients in areas such as financial services, technology, energy, tax issues, the judiciary and appropriations. He also provides legal representation for clients facing investigations by state attorneys general and the Congress. Additionally, he has established and administered coalitions of companies and trade associations that share common legislative and regulatory objectives, like the Merchants Payments Coalition, which includes several merchant trade associations trying to reform the system of credit card interchange fees.

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