Accepting EMV Chip Cards

Choosing to process EMV chips over magnetic stripes is well worth the few extra seconds.

EMV stands for Europay, MasterCard and Visa. It refers to a security standard the major credit card brands implemented in the form of a small metallic square on the front of payment cards. To curb fraud, cards are embedded with these microprocessor chips designed to protect cardholder data.

Unlike the magnetic stripe on the back of the card, which holds unchanging data, the EMV chip produces a unique encrypted code for each transaction. So if chip data gets stolen and is replicated to produce a counterfeit card, it won’t work for any subsequent transactions, whereas magnetic stripes can be replicated and used again if stolen.

Instead of swiping a card at the point of sale, chip cards require a cardholder to “dip” the card into the payment terminal and wait a few seconds while the POS system relays the data through the authorization process to validate the customer’s funds and approve the transaction.

The EMV Liability Shift

There are a lot of incentives for a business to accept EMV chip cards. Businesses can decrease their risk of chargebacks and give customers peace of mind making electronic payments. There’s also pressure from credit card networks to switch from magnetic stripe processing equipment to chip readers. In October 2015, the card networks put a liability shift into action that started holding merchants responsible for the costs of credit card fraud if they haven’t installed an EMV chip processing system and the customer has an EMV chip card. If the chip card gets hacked when a merchant opts to process it via magnetic stripe, the merchant is liable to cover financial damages.

Prior to the liability shift, credit card brands usually covered fraud damages regardless of payment method. While it’s not a law to have a chip reader, credit card networks strongly encourage businesses to invest in it by enforcing these consequences. EMV standards only apply to card-present transactions since they can’t be used to authenticate online payments.

Banks started issuing EMV chip cards in 1994. They were popular in Europe before they gained momentum in the U.S., proving to be very effective in reducing card fraud. More and more merchants have adapted to the change and installed new equipment and software to process chips, and we can help you do the same.