Haven’t Taken the EMV Plunge Yet?

Payments Leader

Posted on October 17, 2015


Haven’t Taken the EMV Plunge Yet?

What’s a Store to Do?

On October 1st, the much-talked-about EMV fraud liability change went into effect.  That marked the first major step to full conversion from magnetic-stripe payment cards to EMV (Euro pay, MasterCard, Visa) – or “chip” – cards in the United States. Countries the world over have been using the technology for many years and data shows that the updated card technology is a fraud deterrent for card-present transactions at the point of sale.

Does everybody have to make the switch?

Merchants are not required by law to switch to chip card readers.  However, according to a new federal statute, businesses that have not updated their payment processing hardware and software may now be liable if they accept a counterfeit card presented at the point of sale.

It’s important to note that for ATMs and remote payment devices, such as pay-at-the-pump terminals, the liability shift may not occur until as late as 2017. For a full look at the timeline, check the EMV Connection.

How does it work?

Chip cards have an embedded microprocessor that stores and protects user data. When a customer pays with a chip card, the technology produces a one-time, encrypted approval code. Since each code is unique, the chip is almost impossible to counterfeit.

What are the real risks of delaying?

Risks include costs associated with fraudulent charges. For instance, if a merchant obtains an authorization by swiping the card at the point of sale, but that card was counterfeit and a chargeback occurs, that merchant will not be paid for the transaction.

So, what’s a store to do?

In an era of growing threats to data and payments, it’s important to make sure you are working toward the safest transactions possible. While it’s nearly impossible to match the level of fraud prevention EMV can offer, there are some steps you can take in the meantime.

Until you upgrade:

  • Ask for a photo ID.  Hotels have been requiring photo identification for some time, and so many customers are used to providing ID when using a credit card. In the event of customer complaints, it is easy to explain that you are doing this for their protection. Prepare you staff to handle this by providing an easily understood explanation; Consider phrases like, “For you added protection, could I please see a photo ID?”
  • Verify the card number. Most POS terminals have the option of displaying the last 4 digits of the card number to allow the clerk to verify the embossed card number with what is encoded on the magnetic stripe.  If a fraudster re-encoded the magnetic stripe with a stolen card number, these would not match.  Call your processor to make sure this option is available and enable it.

Plan your transition:

  • Contact your payments processor to find out your options.
  • Do your research – this might be a good time to compare offerings from multiple processors.
  • Commit yourself to making an upgrade plan.

Partner with your processor to make this transition work for you.  Once you make your plan, stick to it.  Now that you know  a little more, what is your next step?

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Payments Leader

Payments Leader from FIS provides insights on credit, loyalty, fraud and emerging payments strategies through blog posts from our industry experienced authors.