The ABCs of EMV: Adopt the chip standard and prevent big losses

Submitted by BizUnite

The new global smart card standard in payments is coming to the U.S. by October 1, 2015. You may need to upgrade your current point-of-sale terminal or POS software, so you can accept EMV or chip enabled cards – or else the fraud liability will shift to you.

A. What is EMV?

EMV is not new; it has been around since 2002. EMV stands for Europay, Mastercard, and Visa because they are the three entities that got the global payment standard started.  EMV is used among merchants and banks in more than 80 countries. In 2013, the U.S. accounted for 51% of the global fraud costs.  Last year, the U.S. experienced huge breaches from Target, Home Depot, and many other large retailers. In order to reduce these breaches the U.S. is stepping up security measures.

EMV has been proven to cut fraud; in the U.K. fraud declined 27% in 5 years. EMV adds a proven layer of security to credit card processing. At the moment of the transaction – when the cardholder is most susceptible to fraud – an EMV cryptogram validates the authenticity of the card.  The cryptogram makes sure that the authorized party, such as your bank, is the only one who has the key to decode it. In short, the technology is vastly more secure than traditional swipe-the-stripe cards.

B. How are EMV cards are processed?

Instead of swiping, the card is inserted into the terminal – a process called dipping. Most current terminals are not setup with the proper technology to perform this. When dipped a unique cryptogram is generated to protect the cardholder’s sensitive information. That means the information from the terminal back to the cardholder is essentially useless, because the bank is the only party with the code to decipher it. This makes every transaction unique.

C. How does EMV affect my business?

The biggest change is going to be liability. In the past, the credit card companies were responsible for any breaches or fraudulent transactions. With EMV the liability is going to switch to the party with the less compliant technology. That means if you, the merchant, is processing EMV or PIN-enabled credit cards on a terminal without the new security features, you will be responsible if that cardholder’s information is stolen along with any fraudulent purchases.

Be Prepared!

BizUnite and Ignite Payments/First Data can help NARI members figure out what they need to accept EMV chip cards. Simply call 844-287-2837 or email busaves@bizunite.com to connect with a Savings Consultant today. Now is also the perfect time to think about switching processors, before purchasing a new terminal or POS software, to make sure you are receiving the lowest rates. Plan ahead; October will be here before you know it.

Be ready for October 1, 2015.