The October 1 EMV "liability shift" in the U.S. is finally here. Nonetheless, businesses around the U.S. are showing varying levels of awareness of the impact, responsiveness with action, and subsequent preparedness. Preparedness is most driven by a business's awareness of if and how EMV will affect their day-to-day operations. Businesses must ask: What is EMV? Why is the industry switching? What will my customers need to do? What do I need to do to prepare? And last but certainly not least: How can I best upgrade to accept EMV and whatever is next?

Let's start at the beginning.

What Is EMV?

EMV simply stands for "Europay, MasterCard and Visa," representing the three organizations that developed the specifications for a global, chip-based, credit and debit card issuance and acceptance network. These specifications and requirements cover issuance (i.e., guidelines for the bank that prints the consumer credit cards, now with chips) and acceptance (i.e., rules for the way the seller must take payment and transmit payment information). Cards issued in compliance with these specifications are called EMV cards, also known as "chip cards." According to EMV Connection, 2.37 billion chip cards are already in use around the world, but many hundreds of millions more are currently being issued.

What is the Benefit of EMV?

It's important to call out that EMV is not a new concept. It's been a reality in Europe and Australia for years.The facts are that EMV chip-based, token-driven technology makes it harder for fraudsters to scam businesses and consumers alike. The security and anti-fraud benefits of the chip-based cards have been proven in the majority of developed payments markets to be materially greater than their predecessor mag stripe cards.

How do EMV chip-cards work, and how do they prevent fraud?

The cards themselves have an external microchip on the front of the card, and many have an additional transmitting chip inside the card. During a transaction, the external chip passes a one-time "token" that has been instantaneously delivered to the chip, which contains just enough information for the merchant to gain validation from the banks that the transaction is a safe and secure one, and the buyer is legitimate and able to pay. This enables an authentication for purchase that doesn't require the direct passing of consumer credit card details, which mag stripe cards have traditionally done.

It's important to understand that token-based technology is one of the primary reasons why transactions done via chip card are considered more secure. To supplement the authentication security of the chip-delivered token, consumers using chip cards may additionally be prompted to sign or enter in a PIN number, depending on the merchant payment device, the type of card, the purchase amount and other factors. Again, tests in many markets prove that requiring consumers to dual-authenticate (e.g. enter a PIN) helps to prevent fraud and drives savings.

SO...what does this mean for my business?

As of October 1, merchants who do not -- or are not equipped to -- accept EMV payments will be held liable for counterfeit fraud for their in-person transactions when their customers use chip cards, unless they upgrade to an EMV terminal. But instead of forcing this shift as a cost burden alone, the organizations behind EMV have ensured that merchants should realize significant benefit from this upgrade cycle, and are creating additional compelling incentives to enable NFC-based mobile payments acceptance in your terminal. The incentives may just be strong enough to consider "future proofing" your business.

Hidden benefits of upgrading: mobile payments.

The high-value benefit from fraud protection is adjoined by the additional incentive of being able to accept NFC and any other relevant mobile-based payment. It's easier to make mobile payment acceptance a priority when it's paired with the cost of EMV upgrades. We all know mobile payments are going to be big. It's just a matter of when. Forrester predicts mobile payments volumes will hit $142 billion by 2019. So why isn't it happening more quickly? Well, small businesses tend not to have the time or the resources to look for the latest and greatest in POS systems, even if EMV liability is the cost. But for many, the EMV liability shift and the waived PCI compliance fees will be a strong incentive to upgrade. When they upgrade, they have an additional incentive (likely in the form of waived PCI compliance fees) to also enable mobile payments via NFC chips.

What's the best way for my business to take advantage of the EMV upgrade cycle?

Payments providers like PayPal have developed single-terminal solutions which accept EMV (chip and pin as well as chip and sig), NFC and mag-stripe cards. If you don't already have an upgraded, lower-cost, higher-customization tablet-based solution, this may be the time to upgrade. If your terminal setup isn't tablet-based, you can replace an existing non-compliant terminal and POS system with a tablet, an EMV and mobile-ready card reader -- and be EMV compliant and ready for mobile payments. In addition, upgraded mobile POS systems cost only a fraction of what traditional cash registers cost. This is a win-win. Merchants get an upgraded POS, are no longer liable for unauthorized activity for in-person transactions, and can accept many new types of payments -- ultimately helping to boost sales.

How YOU can prevent fraud and save money (and yes, PayPal can help)

Businesses can save money and improve sales by continuing to strengthen their payments security, especially in their online and mobile channels. Moreover, payments hackers and fraudsters are speedily moving online. As more shoppers have moved online in recent years, fraudsters have followed. To make sure businesses are protecting themselves while also capturing additional value from improved security, they should work with payments partners that make security a top-priority. Companies like PayPal, with 17 years of experience helping businesses process online payments, have also moved into the POS world, extending their fraud-prevention capabilities into tools like EMV card readers. The protection PayPal is able to deliver is centered on a promise of fraud prevention backed by world-class, in-house risk-management capabilities that are proven to prevent fraud. PayPal tokenizes all data, never transmits full financial information when consumers shop using PayPal, and offers extensive buyer and seller protections to make sure consumers and merchants are as secure and protected as possible from losing money.