Why Has The Market Chosen EMV?
With less than six months to go until the October deadline for EMV® retailer conversion, there appears to be a little bit of a scramble to upgrade happening. Last week, the Food Marketing Institute, an advocate of the food retail industry, sent a letter to major credit card companies asking for a delay on the deadline until 2016. The primary reason for the delay would be to avoid having to use the new EMV terminal technology during the holiday shopping season, which could result in longer lines than normal, according to FMI’s letter.
What Is EMV?
To recap, October 1 is the deadline set by the card brands for retailers in the United States to upgrade their point-of-sale (POS) systems to accept EMV payment via chip cards.
Chip card payments were introduced overseas to combat credit card fraud. Each EMV chip card has a small computer chip on it, which provides better protection against fraud than a magnetic stripe card. How? The magnetic stripes on cards produced in the U.S. contain a standard set of data necessary to make purchases. That information doesn’t change, making it easier for fraudsters to gain access to.
In contrast, each time a chip card is used for a transaction with an EMV terminal, it creates a unique, dynamic code for that purchase which cannot be used again. In the event of a massive data breach, where all the cards compromised are chip cards, the information obtained would be more difficult for hackers to capitalize on.
Right now, the loss caused by fraudulent card transactions tends to fall on the merchant or the issuing bank. After the October deadline, any losses from card-present fraud will defer to whichever party is the least EMV-compliant in a fraudulent transaction. So if you’re a brick-and-mortar business and you haven’t upgraded to an EMV terminal by October 1, you’ll likely be stuck with the damages from a fraudulent purchase.
What You Can Do
It should be noted: the EMV transition shouldn’t affect e-commerce, mail-order, or telephone-order business right away, since card-present transactions are not taking place. However, once the in-store wave is handled, it’s expected that card-not-present transactions will be addressed. In the meantime, card-not-present retailers are urged to be extra mindful, and always adhere to best practices.
As there is no indication yet the EMV deadline will change from October, we recommend upgrading to an EMV terminal soon, to avoid any rush as October approaches. If you’d like to see what changes are in store for your business, and what options are available to get ready for the EMV liability shift, we can help.