Swiping credit cards is becoming a thing of the past, thanks in large part to EMV chip card technology. Beyond the convenience and added level of protection this change offers to consumers, if your business hasn’t yet taken part in the EMV migration, you could be on the hook for any fraud-related losses. In other words, you’re at risk, both from a financial standpoint as well as a reputational one.
What is EMV?
Technically, the acronym EMV stands for EuroPay, MasterCard and Visa. An EMV card (or chip card) features a micro-computer chip embedded which stores and protects the personal data of the card holder. The purpose of EMV is to strengthen the security of credit card transactions and protect both consumers and merchants from costly fraudulent transactions. With credit card theft and counterfeiting on the rise, EMV chip card technology provides more rigorous cardholder verification, vastly reducing the chances of a breach.
Why does EMV migration matter to my business?
The most important thing to understand about the EMV migration, at least from a business standpoint, is the shift in liability that it brings. As of October 2015, any merchant not using an EMV point-of-sale (POS) terminal will assume all liability in the event of a fraudulent transaction.
Let’s say Mary’s credit card information gets stolen and before she realizes, the perpetrator creates a counterfeit card, visits your business and helps him or herself to a $5,000 shopping spree. Who do you think will be responsible for that $5k? While the answer isn’t completely cut and dry, generally speaking, if the phony card is accepted and run through a POS system that is not EMV ready, you’re on the hook.
Similarly, in cases where an EMV chip card is stolen, if said card is used at a merchant and accepted via a POS system that is not EMV compatible, the merchant would once again be liable for any subsequent chargebacks.
Can you really afford to cover such damages? Probably not. That’s why EMV is so beneficial. With an EMV system, counterfeit cards cannot be processed because they do not contain the necessary microchip, thereby preventing the proposed $5k theft from occurring in the first place. Likewise, because most EMV transactions require the use of a PIN and/or a signature (except for debit), fraud via stolen cards can also be prevented.
How does EMV chip card technology work?
From the consumer’s standpoint, using a chip card is simple. Instead of swiping the magnetic strip, the card is “dipped” into an EMV reader so the chip can be scanned and verified. The added level of protection comes into play when the transaction is processed. Each time the EMV card is used, the chip inside generates a unique transaction code which cannot be duplicated or used again. This thwarts would-be hackers from stealing and replicating data.
In order for this new technology to work, the merchant must have a POS terminal or system that is equipped to read and communicate with the embedded microchip. These new systems will remain compatible with traditional swipe-cards, but provide the added benefit to the merchant of zero liability on swiped transactions as well. In other words, with an EMV system in place, your business is doubly protected.
The time to act is now…
If your business hasn’t officially made the EMV migration, the vulnerability is real – especially over the holiday season. The good news is, there are credit card processing companies that specialize in helping with EMV implementation. Not only will making the switch provide greater protection against costly fraud, but it will also give your company competitive advantage over others in your industry, so it’s a win-win.
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