February 2006 - Small Business News

Don't Forget New Chip and PIN Rules

If your business accepts payments on debit or credit cards, you need to be aware of how the changes to Chip and PIN rules affect your sales and potential liability to fraud.

This is especially important for the 20% of (mainly SME) businesses that advisors Grant Thornton say have not yet switched to the new system.

Since 14th February 2006, it is mandatory (with a tiny number of exceptions shown below) for customers to enter their PIN when purchasing using a Chip and PIN enabled card. If the customer does not know their pin number then they must pay by other means.

If the customer is paying on equipment that is not enabled for Chip and PIN, then they may still sign. This however is becoming increasingly risky for businesses, you are now held responsible for any card fraud that takes place if you do not have Chip and PIN equipment.

With the introduction of the scheme creating a huge reduction in fraud, it is retailers with old equipment that are being increasingly targeted by fraudsters.

The two exceptions to the rules are customers whose card does not have a Chip and PIN (including foreign cards that have not been upgraded), and disabled customers who hold Chip and signature cards.

If you still have not switched, remember that just one case of fraud for your business could work out more costly than switching to Chip and PIN. Your reputation is also at risk if people believe your business to be less safe than your competitors.