As reported in the Cleveland Plain Dealer, front page of the Business Section in Sunday’s Aug. 2nd paper, “Chips Coming to Cards’ Defense“;
“Oct. 1 is the deadline for banks to re-issue 1.2 billion credit and debit cards that are in circulation in the United States with new cards that contain fraud-resistant computer chips. And Oct. 1 is the deadline for retailers nationwide to upgrade 10 million card readers.”
However, before you buy, rent, or lease upgraded terminals with new EMV Smart Chip technology terminals make sure you gather all the relevant facts to help make a profitable decision. Look, we know merchant services / payment processing is the LAST thing business owners want to discuss. You do your best to find customers willing to pay you for goods and services – getting your money into your account shouldn’t be so complicated and convoluted. We’ve even heard the stories of under-handed sales tactics by merchant services companies prospecting businesses in Cleveland and throughout Northeast Ohio (i.e. when the sales person pretends to be your provider and tells you to fax over your most recent statement in order to qualify for free up-graded terminals – that’s not real – but it’s a real shame) and we know sifting through these merchant services companies isn’t easy. Hopefully our answers to these four questions will help.
1. What is EMV Smart Chip Technology?
As a result of recent and costly security breaches involving a plethora of large US retailers the smart chip technology being used across Europe to increase the safety of credit card transactions for over two decades is now being adopted in the United States. EMV stands for Europay, MasterCard and Visa, the 3 companies that created the global standard in the 1980s for cards equipped with smart chips, the EMV terminals and other technology used to authenticate each transaction.
An EMV card, also referred to as a Chip Card or an IC Card, has a microprocessor computer chip that creates a unique transaction code when authenticating the data involved in each purchase. Unlike the magnetic stripes that required swiping, the EMV chip can be read two ways, depending on the terminals used by the business and the technology of the card. They can be read through a process called “card-dipping” or by using NFC (near field communication) technology to tap against the terminal scanner, which is referred to as a contactless transaction. Just because a chip card has a smart chip does not mean it will not also have a magnetic stripe, and it does not guarantee it has NFC capabilities for a contactless transaction. The terminals and other equipment you decide on should take into consideration this gradual change in payment technology in order to avoid having to implement new terminals with each evolution.
2. Why are EMV Chip Cards Safer?
Unlike the magnetic strip cards that use the same data to authenticate payments over and over again, every time a chip card is used at a chip-activated terminal, a unique code is generated to approve the transaction— making it virtually impossible to duplicate in counterfeit cards and providing an additional layer of security to reduce in-store fraud.
So if a hacker stole the information from one specific point of sale using a chip card, duplicating the card to make more transactions wouldn’t work because the stolen transaction number is unique to each transaction and not usable again so the fraudulent card would be denied!
3. What is my Liability Exposure with non-EMV Terminals?
Despite popular opinion, your terminals are not required to be switched over to smart chip terminals by October 1st, 2015. The Oct. 1 deadline is being imposed by MasterCard, Visa, Discover and American Express, declaring that if you take a payment from a smart chip card on a non EMV-compliant, magnetic stripe, terminal and it’s fraudulent – you, the retailer, are responsible for the loss. However, if the fraudulent transaction on your non-EMV terminal was from a card that didn’t have smart chip technology, the cost of fraud does not fall on the merchant because the card was not EMV-compliant. In other words, on October 1, the liability shifts to whichever party is the least EMV-compliant in a fraudulent transaction which is why most banks are planning on having new chip cards to consumers before the October 1 deadline.
4. What are the Costs of Changing to Chip Card Terminals?
At Renaissance Solutions Group we can’t speak for other Merchant Services Professionals serving the Cleveland area market. When a retailer identifies they have a need, like new chip card terminals for example, we take a partner approach to the relationship. It’s our goal to be your merchant services partner for the many years you’re in business. We want to be there for your business through this change in technology and the many more changes down the road – whether it’s Google Wallet, Apple Pay, NFC Technology, or this EMV Smart Chip shift. For that reason, we take a consultative approach and will help you determine where your business is headed. Based on these findings, we will present the most appropriate electronic payment options and provide you with the right equipment, at no cost, and with no contract. We believe and trust in our relationships and look forward to partnering with you.
Contact us to learn more about EMV Chip Card Technology and whether or not you should be making a change in your merchant services partner.