You may have heard that the U.S. is transitioning to full adoption of the EMV chip-enabled cards to reduce credit card fraud.
The global standard for smart card payments employs EMV technology, which stands for “Europay, MasterCard, and Visa.” Meaning: Cards will be equipped with super-small computer chips that are extremely difficult to counterfeit.
So why is the U.S. making the switch? Almost half of the world’s credit card fraud happens in the U.S. – even though only a quarter of all credit card transactions happen here. Yikes!
Today, if you swipe a counterfeit or stolen card, the bank assumes the loss. Naturally, banks want to reign in this fraudulent activity as best as possible. To encourage businesses to adopt the more secure technology, a liability shift is going into effect on October 1, 2015. Starting in October, if you swipe a counterfeit or stolen EMV/chip card with a magnetic stripe reader, banks will no longer be liable. So say, your business accepts a payment from a fraudulent card for $50 worth of merchandise. If you don’t have a chip enabled reader/machine, you could be on the hook for the $50.
As you might imagine, chip cards are a hot topic right now. And because any EMV card discussion includes or mentions “fraud” and “liability,” it’s natural that it could put small business owners on edge.
MORE SECURE THAN TRADITIONAL MAGNETIC-STRIPE CARDS
EMV microchip-enabled cards provide stronger security and other capabilities not possible with traditional magnetic-stripe cards. A small computer chip is placed on the card and it’s what sets it apart. Traditional magnetic-stripe cards contain unchanging data. Whoever accesses that data gains the sensitive card and cardholder information necessary to make purchases.
Unlike traditional cards, every time an EMV card is used for payment, the card chip creates a unique transaction code that cannot be used again. If a hacker stole the chip information from one specific point of sale, card duplication would never work because the transaction number would not be usable again.
EMV technology will not prevent data breaches, but it will make it much harder for criminals to successfully profit from what they steal. .
BRAND NEW TECHNOLOGY
Not really. Most of the world, including Europe, has been using chip cards for years. The U.S. is, in fact, the last major market still using magnetic-stripe-only cards.
SWIPED THE SAME AS MAGNETIC-STRIPE CARDS
Cards will no longer be swiped. For the October deadline, card issuers are implementing the chip-and-signature scheme. Cardholders will continue to sign for their purchases. However, instead of swiping, chip cards are inserted, or “dipped,” into the point-of-sale (POS) system (payment device) and left in place for the entire transaction as the reader and card talk back and forth. Once the transaction is completed, you remove the card.
Chip cards will also be compatible with touchless systems (such as ApplePay etc.).
NEW EQUIPMENT
More than likely, your current equipment (unless you have updated recently) is not equipped for chip card transactions.
HOW DO I COMPLY?
Card issuers are beginning to issue chip cards, but not all merchants and business owners have made the switch to EMV-capable POS systems.
Business owners and merchants should first analyze their current technology and determine if it needs to be replaced or upgraded. Equipment upgrades can be both costly and time consuming, so merchants should consider these factors and plan accordingly. Some decisions a merchant will have to make are, but not limited to:
- Does the POS hardware need to be replaced?
- Is the POS software up-to-date? Does it need to be upgraded or replaced?
- What PIN pad devices are needed for EMV transactions?
Or, business owners could do nothing and continue processing card transactions as they have, but with higher liability.
Still not sure what this can mean for you? Get in touch with us with your questions!