EMV or “chip and PIN” is a big talking point in the payments industry right now as we get ready to say farewell to the swipe-and-sign credit card. Since there are an estimated 15 million magnetic stripe terminals in the U.S., according to The Nilson Report, the switch to EMV over the next couple of years is going to have a big impact on how merchants accept electronic payments as well as the way customers use their cards.
On October 1, 2015, customers will stop swiping their credit cards and start inserting their card into a slot that will read a microchip, not a magnetic stripe. Because much of the rest of the world is already using EMV technology, the U.S. has seen increasing rates of fraud as criminals look to the easiest path to consumer data. The good news and the largest advantage to the EMV chip and PIN card standard is that it will drastically cut down on credit card fraud due to counterfeit cards.
Since some of the data on the chip changes with each transaction, this allows the issuer to confirm that the card is authentic. According to TSYS, EMV is designed to protect merchants from the counterfeit market with the dynamic authentication feature, the chip in the card is the authentication component of the card, and the PIN is the authenticator of the cardholder. EMV payment cards also provide more secure online transactions, unlike those with magnetic stripes.
EMV’s effect on businesses who process credit cards
So what does this mean for you – the business owner? As of October 1, 2015 due to VISA and MasterCard’s new standard, merchants who have not made the switch to EMV chip card technology will be automatically liable for chargebacks – shifting from the credit card companies to the merchants. Card issuers are already sending EMV cards to consumers, and now it becomes the business owners’ responsibility to update terminals.
The EMV switch will also have implications on mobile processing. Companies like Square are facing the largest impact since their tech was built on swipe and sign.
At Integrity, we are actively helping our merchants make the switch. Integrity is already shipping EMV-enabled terminals to merchants, working with the major players in our industry to put EMV terminals into the U.S. marketplace. You can trust that the Integrity team will always work with our merchants’ best interest in mind, making it our goal to help guide our customers through this shift in the payments industry.