Credit Cards and Risk Management

How many of you remember when you would pay for something by credit card – hard goods, a meal in a restaurant – and the establishment would actually place a telephone call to the credit card company for approval?

I can recall being at a restaurant in upstate New York perhaps 20 years ago. I went to pay while my wife and friends said they would meet me at the car. It took the restaurant manager perhaps 5 minutes to get through to American Express to get approval.

This is not my first blog about credits cards and technology. We all know that the future of both buying and giving is changing very rapidly. We know that more and more synagogues are accepting and encouraging online payments for everything. Churches, too, are evolving in terms of technology as “passing the plate” has become giving kiosks and smart phone apps that serve the same purpose.

Conducting synagogue business this way is more complex and involves more risk in terms of fraud. To congregants, paying synagogue dues/annual commitments should be as easy as paying a utility bill or buying any type of goods online whether it by from Amazon or any business.

Credit card technology is changing. By October 1, 2015, the old style credit card readers where you swipe a credit card need to be replaced by a machine where you insert and dip a credit card. Credit cards that have a magnetic strip – the kind you swipe – are now being replaced by cards with a computer chip embedded in each card. Cards with chips are more common in Europe than they are in the U.S. I guess it would be no surprise then that credit card fraud happens more in the U.S. than in any other country.

The bottom line for synagogues using credit card machines is this: You need to update your credit card machines by October 1st. Until that time, the credit card company assumes liability for any instances of fraud. After October 1st, whoever (vendors including synagogues) is using the old card system (the swipe system) will be the liable party.

The risk is that if someone somehow used a credit card number that was last swiped at one of the older credit card machines at a synagogue for a huge purchase, the synagogue would have to foot the bill for the fraudulent charges. Despite the safeguards you are following now to prevent fraud, it still can happen.

You shouldn’t wait for the credit card company to contact you about the need to update the synagogue’s “swipe” credit card machine. You should contact them and insist that the new machine with the chip technology where you insert and dip the card be provided to you by October 1st.

You need to be able to process credit card payments because this is how people conduct the business of life today. But you don’t need to assume such risk for fraud. Simply update your machines with the newest credit card technology.

 

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