The move toward EMV chip-enabled cards in America was initiated as part of an executive order issued by President Obama in 2014 to enhance payment system security. Although most card merchants were subject to an October 2015 deadline intended to make EMV chip cards the new norm in payment processing, a February 2016 study by The Strawhecker Group indicated that fewer than 40 percent of businesses are equipped to process EMV cards.
Whether you met the deadline or aren’t yet EMV-compliant, you may have lingering questions about EMV, including why chip cards were issued, and what the change in payment processing standards means for merchants and consumers. Here are some of the basics all merchants should know about EMV payment processing.
Why EMV cards were issued
EMV chip cards may be a new technology to many Americans, but they’ve been the norm for years in Europe, Canada, Asia and Latin America. In 2012, global payment issuers Europay, MasterCard and Visa (hence the “EMV” acronym) determined that a global shift to EMV chip cards could improve payment security and better protect financial institutions, merchants and customers. According to First Data, the United Kingdom decreased its payment fraud rates by nearly 20 percent in just one year, following its transition to EMV chip cards.
Though most of the EMV chip cards re-issued in the United States still include a magnetic strip, experts at EMV Connection explain that the square chip on the front of EMV cards provides greater security during the entirety of transaction processing. Additionally, the chip reduces the likelihood that criminals can produce counterfeit credit cards, compared to magnetic strip cards.
Why EMV is more secure
When a customers use an EMV chip to pay, they insert the card (chip side up) into a terminal at the point of sale, where it remains throughout transaction processing. Once the square chip is detected in the EMV terminal, it acts as a microprocessor that facilitates the transmission of payment data. EMV cards provide a more secure transaction thanks in part to a process called tokenization; it replaces sensitive data with a unique and random sequence of numbers (called a token). If cyber criminals intercept a transaction, the token is meaningless to them. Thieves cannot use the information from a token to identify customers, their account numbers, or use the token to initiate fraudulent transactions.
Who enforces EMV compliance
Though merchants who operate pay-at-the-pump fuel stations have until 2017 to transition to EMV-enabled point-of-sale terminals, most merchants are now expected to be equipped to process EMV cards. Though merchants may still allow customers to swipe their card’s magnetic strip, they bear the risk of potential breach. Now that the October 2015 EMV deadline has passed, a merchant that does not have the capability to process EMV chip cards could be responsible for the fines, fees, lawsuits and damages that ensue in the event of a payment security breach.
How to incentivize customers to use EMV
Like any change in process, EMV chip cards may remain unfamiliar to cardholders. Because EMV cards represent a change in payment processing, merchants who have EMV terminals may need to be proactive in helping customers gain comfort with the technology.
When it’s time for customers to pay, train your customer-facing team to ask the customers if they want to pay using their EMV chip card. If the customer isn’t familiar with how to use the technology, teach point-of-sale staff to guide them on the basic steps, which include inserting their chip card into the EMV terminal when they hear a tone, and leaving it there until a second tone sounds. If customers ask about the benefits of using their card’s EMV chip feature, staff can explain the value, in layman’s terms: Customers’ sensitive data is replaced with a token that better protects them from potential data thieves and cyber criminals.
EMV-enabled cards are a new method of payment, and may still be unfamiliar to businesses and customers. Despite that, EMV card technology provides benefits for all involved in payment processing. Invest in the equipment that will protect your business and customers from unnecessary risk, and educate your staff with ways it can help customers feel just as comfortable paying with their EMV chip feature as they do using a magnetic strip card.
© 2016, Kristen Gramigna. All rights reserved.