10 FAQs About EMV & Chip Cards
Time is running short for business owners to upgrade their credit card terminals and stay on the safe side of the EMV liability shift. The good news is it's not too late to make the switch.
Brick-and-mortar businesses accepting card-present payments have until October 1, 2015 to upgrade to an EMV ready credit card terminal, or risk being liable for losses from fraudulent transactions involving chip cards. The so-called liability shift transfers responsibility for losses to those who are less chip card ready in any given situation.
We know there is a lot of information about the chip transition circulating in the marketplace, and things can be a little overwhelming. To help separate fact from fiction, we've compiled a list of 10 common EMV questions and answers.
What is EMV?
EMV is an acronym for Europay®, MasterCard®, Visa®, the original three partners that developed standards for adding a micropressor chip onto debit and credit cards, now known as chip cards. (Since the standard was developed, EMV has grown to include partners like American Express®, Discover®, JCB®, and UnionPay®.)
Chip cards offer better security against fraud than traditional magnetic stripe cards, and by the end of the year, Visa estimates more than 600 million chip cards will be issued in the United States.
Why are chip cards more secure?
Since all purchasing data used on magnetic stripe cards is static and doesn't change, when thieves gain access to a cardholder's information, it's easy to use for fraudulent purposes.
Each time a chip card is used for a transaction, a unique, dynamic code is created that cannot be used again. So even if a criminal somehow manages to steal a customer's personal information for any given chip card transaction, it will be tougher to use than if it had come from a magnetic stripe card.
Why is the U.S. adopting EMV?
The rest of the world began migrating to chip technology in the 1990s, helping nations like the U.K. achieve all-time lows for credit card fraud. In the U.S., where almost half of the world's credit card fraud takes place, retailers have taken notice of the more secure technology and are leading the charge to now adopt it here. Many have already made the switch. In addition, the U.S. government began adopting chip technology for all government payment cards, and updating all POS terminals at federal facilities such as post offices and national parks, in 2014.
How do I become EMV ready by October 1?
Achieving EMV readiness is fairly straightforward. For most businesses, it simply involves upgrading to chip-ready terminals. These next-generation machines accept payments initiated by chip cards and (in many cases) Near Field Communication (NFC) devices such as smart phones.
Some businesses - especially restaurants and bars - that rely on specialized POS systems may need to upgrade their system software. In that case, be sure to contact your POS service provider to make sure you are able to accept chip cards by the Oct. 1 deadline.
What happens if I don't upgrade to a chip-ready terminal by October 1?
You'll be on the wrong side of the fraud liability shift. When the liability shift takes effect in October, fraud liability will shift to those who are less chip card compliant in any given situation. So if a consumer passes off a fraudulent transaction on a counterfeit chip card in your business after October 1, you'll be responsible for the damages unless you've upgraded.
How do payments work with EMV terminals and chip cards?
Instead of swiping as consumers would with a magnetic stripe card, chip cards are inserted into an EMV ready terminal or POS device. The card stays in the terminal during the entire transaction, while the consumer types a PIN or signs a receipt for authentication. When the transaction is finished, the card is removed from the terminal.
Will customers with magnetic stripe cards still be able to make transactions at an EMV terminal?
Yes. Chip card-ready terminals will accept swipe payments from magnetic stripe cards if necessary.
Besides combatting fraud, are there any other benefits to making the chip card transition?
Many new chip card readers also are equipped to accept NFC-based mobile payments like Apple Pay™ and Samsung Pay™, and can help prepare your business for these new, emerging payment types.
How will the EMV transition affect card-not-present transactions?
For now, the upcoming liability shift only affects businesses accepting in-person or card-present transactions. Ecommerce retailers, mail order, and telephone order businesses handling card-not-present (CNP) transactions don't need to become EMV ready at this time.
The dangerous flipside is that in all countries where the EMV transition has already taken place, card-present transaction fraud dropped dramatically, while CNP fraud skyrocketed. So if your business accepts online or other types of CNP transactions, you may consider beefing up your credit card payment security now to safeguard against any surge in fraudulent activity.
Where can I get a chip card-ready terminal?
TSYS Merchant Solutions is at the forefront of the EMV transition, offering education, updates and multiple solutions to help business owners prepare for the transition. Many of our customers are already up and running with their new chip card equipment, accepting chip cards and helping protect their customers' sensitive card information.
If you'd like more information about the EMV transition, we've published a downloadable eBook titled "EMV®, Tokenization, & Encryption: The Path to Securing Your Small Businesses."
And, we're standing by to help. Contact us at 800.228.2443 or online.