Three things to know about the new EMV chip cards
EMV chip cards are the new way to pay, but what kind of practical changes do they mean to the average merchant and consumer? If you own a business, you've probably seen countless notifications from your payment processor letting you know how important it is to switch your payment system to accept EMV chip cards. Maybe you've already done so without entirely understanding why, or maybe you still haven't made up your mind about whether or not this change is worth it. Here are the top 3 facts about the cards and related EMV technology you need to know.
1. EMV Chip Cards Reduce Fraud
Credit card fraud is a real threat, and it causes a huge portion of Americans a lot of grief when their data is hacked. A new credit or debit card is not really a huge inconvenience (though it can be after the fifth time it happens in a year), but identity theft can cause huge financial burdens not to mention a lot of wasted time. The potential benefits a criminal can reap from these data breaches is enormous, and the rate of those being targeted is growing exponentially. One of the many ways card data criminals use stolen data is in the form of cards created fraudulently from stolen data. Subsequent use of these cards, and this data, obviously presents the potential for huge revenue loss for those who cover the fraudulent charges downstream..
Historically, much of this loss liability was levied on the card issuers. As of October 1, 2015, liability for fraudulent charges made at the physical point-of-sale shifted to those "least secure" in the EMV chain. This means if you're not accepting EMV chip cards through chip card-ready terminals, your business could bare the liability and the cost associated with the fraud. So if you're customers can only swipe, you're at risk.
EMV-enabled terminals, now easily available, work to keep people safe by disrupting the pattern of how the data is transmitted every time a new card is processed, thanks largely to the micro-chips embedded in each card. They help eliminate risk from skimmers (theft devices), as skimmers can only lift the information from a magnetic strip. The chip cards are also virtually impossible to duplicate, and considering a great deal of theft occurs through the use of counterfeit cards, this is important to stop the wide-reaching effects of theft. You do not have to accept liability for any of this when you stay current on the technology you use in your business. It should provide some comfort to know there are still a good deal of theft situations that credit card issuers will be taking responsibility for, so this change is very much EMV chip card specific.
2. The Percentage of Americans with EMV Chip Cards is Growing
Only 6 months ago, 60% of people didn't even have an EMV chip card. Most financial institutions focused on the reissuance of chip-enabled credit cards in 2015. That rollout now continues and includes more debit cards as well. This means more chip cards will be used for payment. As of now, if you do have a chip-enabled terminal that is ready to accept chip cards (the terminal incidentally will still have a swiping mechanism), and the payment is made by someone who does not have a chip card, then you won't be held liable for fraud. However, if a consumer has a chip-enabled card, but can only swipe — either because your terminal is not EMV-enabled or ready for use, there's a good chance you will be held responsible for any claim of fraud associated with that transaction. Think about this as you think about the role of EMV acceptance and EMV chip cards for your business.
3. EMV Transactions Happen Differently
Be ready. EMV chip card transactions are fundamentally different. The EMV chip card is "dipped" or inserted into the terminal, versus swiped. The chip card is left inserted for the duration of the authorization and approval process. Experience to date is showing that this takes a bit more time than the traditional swipe method. Anyone who's had a huge line of people stretching out before them know just how much 15 seconds can seem, so expect some impatience both from new users and from those standing in line. Also, certain cards come with PIN access as well as the chip, which may be another new step for people to get used to. No one really loves change after they've gotten used to a certain system for years, but merchants can and should inform people of what it means for their own security. While people do care about convenience, the wide majority will understand that it's much more of an inconvenience to be targeted by a hacker than it is to wait a extra few seconds. If you have noticed that your tech-savvy customers are impatient, you may want to consider upgrading to a terminal or POS that has a Tap and Pay feature that allows mobile payments. Apple and Android both have wallets that automatically deduct from an associated credit, debit or charge card, and use strong encryption to protect their app users.
Regardless of how you feel about EMV chip cards, you still have options about how you choose to operate your business. Simply being aware of them can help you make better decisions based on the facts. You should always be practicing data safety, from staying diligent about who has access to your machines to having extra precautions to double check the numbers and the efficacy of your protocol. Using a trusted payment processor in the business means gaining a partner who can walk you through and explain any new changes in the industry and how to protect yourself. You can get specific information for your business without being overwhelmed by the vast amount of outside information out there, some of which may not even be correct.
Read more about EMV, chip cards and safer payments at Safer Payments-Vantage Point.