EMV Chip Card FAQ
Merchants have questions about chip cards.
We have the answers.
EMV chip card technology is a fraud-fighting success story. Chip cards help merchants win the battle against payment-related crime by protecting customer data and reducing counterfeit fraud in-store.
Yet many merchants lag behind and have not adopted EMV technology. That decision is proving costly for many businesses. Today merchants that still haven’t made the switch are liable for losses related to counterfeit fraud.
Thankfully it’s not too late to upgrade your business to the most secure in-store acceptance. We offer clear answers in plain language to the practical questions merchants are asking about chip cards in 2019.
What are chip cards?
“Chip cards” refer to credit and debit cards that use microchip technology to make payments more secure. When inserted into a chip card-enabled terminal, chip cards create a secure dynamic link and generate a one-time code for every payment.
Chip cards helps keep personal card data safe from theft while protecting businesses like yours from unauthorized card use.
What is EMV?
EMV is a set of global standards for secure payments that helps protect merchants and their customers from fraud. EMV stands for EuroPay, Mastercard and Visa, the card networks which initiated the standards. Today EMV is managed by EMVCo representing American Express, Discover, JCB, Mastercard, UnionPay, and Visa.
Best known for its contact and contactless chip card specifications, EMVCo develops standards that enhance security in areas including mobile payments, 3-D Secure, QR Codes, and tokenization.
Are chip cards safer than magnetic stripe?
Chip cards are much safer than their predecessors. Magnetic stripe (or “magstripe”) cards stored raw data like sensitive account information on magnetic strips on the back of credit and debit cards. That data is hidden from the naked eye but the 1970s-era defenses proved too easy for modern criminals. “Skimming” technology became widespread, allowing criminals to copy cardholder data. Using stolen card data to create counterfeit cards was easy. The static nature of the system opened the door for fraud.
Chip cards were a game-changer for credit and debit card security. Chip card data is encrypted, meaning that unlike raw data in magstripe, encrypted data is hidden from prying eyes.Chip cards made it harder to steal data from physical cards and made counterfeit cards much harder to manufacture and use.
What is the EMV ‘Liability Shift’?
Prior to October 1, 2015, merchants were not usually held responsible for fraudulent transactions that occurred through no fault of their own. Card issuers covered the cost of that fraud. The intent of the shift was to incentivize business to adopt the more secure technology.
After October 1, 2015 liability for losses related to counterfeit fraud shifted to the party that has not invested in chip technology—most often, a merchant. If you haven’t upgraded to EMV-compliant terminals, your business is liable for the costs and fees associated with counterfeit fraud.
Note that due to the difficult nature of the EMV implementation, AFD (automated fuel dispenser, i.e. gas station and convenience store) businesses are working on a different schedule. Recognizing industry difficulties in hardware implementation, the EMV liability shift for AFD businesses was extended until October 2020.
Have most merchants upgraded to EMV?
Yes. Visa’s September 2018 chip card update indicates that 3.1 million US merchants are now accepting chip cards, representing 67% of US storefronts. EMVCo reports that 69.6% of global card present transactions are EMV as of 2018 Q2. The US trails in EMV adoption though that rate is increasing rapidly, from 31% in 2017 to 47% in 2018.
What’s the evidence to support chip cards?
Counterfeit fraud was the leading form of fraud in the US prior to the 2015 liability shift. In a September 2018 chip card update, Visa reported that merchants who had completed the chip upgrade witnessed an 82% decline in counterfeit fraud dollars from September 2015 to June 2018. Visa reports that counterfeit fraud losses at all US merchants declined by 47% over the same period.
Can I still upgrade to EMV?
Yes. Your business can definitely upgrade to EMV.
In fact, it’s never more important to upgrade to protect your business from fraud-related losses. Consider the fraudster seeking to use counterfeit cards with stolen credentials in-store. At the two-thirds of US businesses who have upgraded, EMV has largely shut the door on such fraud. As time goes on, the remaining one-third become even more of a target, as the number of targets that remain vulnerable continues to shrink.
Given the liability for losses and the increasing likelihood of being a fraud victim, upgrading to EMV makes sense for all businesses that accept credit and debit cards in store.
Will EMV totally protect my business from fraud?
No. EMV is an effective fraud-reducing technology that can help protect your business and your customers from financial loss if a criminal uses a counterfeit, lost or stolen payment card at your point of sale.
Protecting your business from losses related to fraud involves a coordinated effort that draws on the best people, tools, and technology available. Regardless of how you do business, protecting what you earn means making security a top priority throughout your organization.
Chip cards and EMV represent essential technologies and tools to protect your business. But they’re just one part of the security puzzle. When it comes to people, we can help.
Worldpay partners with thousands of businesses just like yours to make payments safe, secure and easy. Worldpay helps merchants navigate the complexities of EMV and other security technologies to help protect what you’ve earned. Reach out and speak with one of our payment and security experts today.