With the coming change from traditional magnetic stripe credit cards to EMV chip technology, merchants have a lot of questions about what it means for them, both functionally and financially.
Here’s everything you need to know about EMV:
What is EMV?
The acronym EMV stands for Europay, Mastercard®, and Visa®, the three developers of this technology. It is becoming the global standard for credit and debit card payments, but is just now working its way into the U.S. market. With this transition, credit cards will store and transmit transaction information via chip technology, rather than with the magnetic stripe we are all used to seeing in the United States.
What is chip technology?
EMV-enabled credit or debit cards contain a microprocessor chip that stores transaction data in real time and enables card companies to utilize dynamic authentication procedures. In other words, when you insert your EMV chip card, a unique security code is generated and provided to the merchant instead of the actual card number, as done with a magnetic strip.
How is EMV technology different from the traditional card technology?
EMV chip technology provides a higher level of fraud prevention than magnetic stripe technology because it is not transmitting the actual card number (and in the case of debit cards, your PIN) from consumer to merchant. If a hacker accesses and attempts to reuse one of the one-time-use-only “tokens” provided by an EMV chip card, it will be instantly rejected.
In addition, EMV is an interactive technology that updates the data on the chip with every transaction. Magnetic stripe technology is static and payment data does not change when you swipe it, making those types of cards easier to counterfeit.
EMV chip cards also come equipped with the ability to set a PIN for use instead of a signature, decreasing the likelihood of fraud or forgery with in-person transactions.
Why the change to EMV?
The rash of credit card breaches over the past 2 years has motivated the move toward a more secure technology. With more than 1 billion cards issued worldwide, EMV technology has been shown to reduce fraud significantly, saving credit card companies and merchants money, as well as consumers the hassle of replacement card numbers.
How do the new readers work?
The EMV card readers have a slot into which the credit card should be inserted and left for the duration of the transaction. Just swiping the card and quickly removing it will not allow the transfer of information from reader to computer chip (and back) necessary for the transaction to occur.
When do I have to be EMV compliant?
Most merchants are required to be EMV compliant by October 2015 in order to avoid the liability shift away from credit card issuers. Gas stations that employ pay-at-the-pump technology have an extension to October 2017.
What do credit card companies mean by “liability shift”?
After October 2015, any merchants that do not employ EMV technology will experience a liability shift when fraud occurs. Currently, credit card issuers maintain all the responsibility for the damages resulting from stolen credit card numbers and other types of fraud associated with hacking and counterfeit use of consumer data.
After October 2015, however, that responsibility will shift to the bank issuing the credit card — who may in turn pass this fee back to the merchant — if a chip card is used at a stripe-only terminal*. This can result in an extremely costly amount of liability for merchants to take on themselves if they choose not to invest in EMV card readers.
* EMV liability shift does not apply to card-not-present transactions, lost and stolen fraud, or certain card technologies such as Visa payWave. For details, contact your payment card processor or visit www.visachip.com.
Why should I invest in it now?
Consumers are already being reissued cards with EMV technology by their credit and debit card providers, and most should have their updated cards by October 2015. Once these cards become commonplace, consumer expectation for their use at your establishment will only grow. Because there will be a learning curve for both merchants and consumers, it is advisable to start introducing the technology to your establishment as soon as possible.
Will I still be able to accept traditional cards?
Currently, EMV card readers are being manufactured with magnetic stripe readers as well as chip readers, in order to accommodate consumers who may not have received their EMV-enabled credit or debit card yet.
What kind of training do I need to provide my staff?
Because EMV technology is very new for the American audience, training is key to making its implementation a success. Your employees will not only need to learn how to use the technology themselves, but they will also need to know how to instruct the uninitiated customer on how to insert the EMV chip card, how not to remove it before the transaction is complete, and why and when they should enter a PIN or provide an electronic signature.
How much does it cost?
The cost of converting to EMV technology depends on your POS and the extent of equipment you will need to upgrade or purchase outright, and can range from a few hundred dollars to several thousand.
Paying for EMV technology upgrades in the short time period required for the change is just one of the many ways merchant cash advance can come in handy. Rewards Network has a number of programs that not only get you the cash you need in short order, but can help you reap long-term top line improvement as well.