3 things to know about credit cards with chips
#1: Credit cards with chips will change how your staff and your customers complete a transaction at your physical location.
Know that there will be a learning curve when it comes to accepting EMV chip cards. Once you have upgraded your credit card terminals to accept the new chip cards, you’ll need to train your staff on how customers will be using them. With traditional magnetic stripe cards, the customer (via a touchscreen wired to your terminal) or your associate swiped the card through the card reader and the card data was captured. With EMV chip cards, however, the customer will “dip” the card into the card reader themselves and leave the card there throughout the transaction. The screen of the touchscreen will instruct the customer when it’s safe to remove the chip card from the reader. The chip card stays inside the reader for the entire transaction because the chip on the card is creating and submitting unique processing data for that transaction.
With magnetic stripe data, the same exact payment data (card number, cardholder name, expiration date, etc.) is sent across the network for processing. That is why it has been so easy for fraudsters to steal the data and then use it successfully in subsequent transactions. With chip cards, however, the data generated for each transaction is unique and therefore can only be used for that single transaction. Even if the data is stolen in an EMV chip card transaction, it cannot be successfully used to authorize subsequent transactions.
#2: Credit cards with chips can prevent one of the most common fraud types: counterfeit card fraud.
Credit cards with chips were designed to combat one specific type of fraud: counterfeit card fraud. EMV chip cards have been in widespread use across Europe and other areas of the world for many years, and they’ve proven to be quite successful at combating card-present fraud. According to a study by the UK Card Association, the implementation of EMV in the United Kingdom from 2004 to 2012 reduced credit card fraud in brick-and-mortar locations by 75 percent. On October 1, 2015, the United States officially began its EMV migration process. Though it has been a relatively slow process, those in the payments industry hope to see the same decreased counterfeit card fraud results in this country as have been seen in Europe.
#3: Credit cards with chips will not prevent other types of card fraud.
Unfortunately, credit cards with chips don’t prevent other types of fraud from occurring. EMV chip cards are not useful in combating online fraud, for example. What’s more, the data from the EMV chip card transactions can be stolen; it’s just highly unlikely it will be useful to the fraudster. The same UK Card Association study cited above found that the fraudsters that once concentrated on card-present fraud in physical store locations have shifted their focus to the following locations that are less secure:
- Online transactions
- Elaborate ATM fraud
- Markets without chip-and-PIN cards like the U.S.
For these reasons, it is critical that you have other security measures in place above and beyond just accepting credit cards with chips. If you conduct business online, for example, you may want to consider SSL (Secure Socket Layers) to protect your website and your customers’ payment information. To protect sensitive data throughout the life of the transaction, you may want to look into point-to-point encryption or tokenization to mask card information. The best way to combat fraud is to partner with a processing company that takes security seriously and is committed to keeping your systems safe and secure.