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New Credit Card Chips And Business Formation And Planning

New Credit Card Chips And Business Formation And Planning

The familiar magnetic stripes on credit cards are going to begin to disappear as of Oct. 1, 2015. New credit cards will have chips in them, which is supposed to deter thieves from making counterfeit cards. This change will create a new burden on small business owners since the new cards require new equipment and software. The penalty for not converting to the new credit card system is that the business owner will be held liable for any fraud that occurs. This needs to be a consideration for any California entrepreneur who is in the initial stages of business formation and planning.

Many businesses link their payment system with other systems, such as inventory management. This will need to be taken into consideration when choosing a software, which can run from hundreds to thousands of dollars, depending on a company's needs. Further, installation of the software and hardware could be time consuming and dealing with potential glitches could be problematic. These are startup expenses that bear careful consideration by anyone wanting to start a business.

Some sources are recommending that the payment system be kept separate from other systems in order to maintain security of the company's information. This will mean that additional software, equipment and technical assistance will be required. All of these things need to be taken into consideration when analyzing startup costs.

In addition to the products, purchase agreements, licensing agreements and other contracts may be required. None of these should be executed without first having them reviewed to ensure that the business owner understands the company's rights and responsibilities. There are a plethora of legal and business decisions to be made during the business formation and planning phase, but the time and effort a California entrepreneur puts in up front could help ensure that the company has the best possible chance to succeed.

Source: columbian.com, "New chip credit cards put squeeze on small business", Joyce M. Rosenberg, June 21, 2015

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