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EMV & Chip Cards Guide

In this guide, we’ll take you through the basics of EMV technology, its benefits, and best practices for accepting chip cards so you can avoid payment disputes.

What makes EMV cards secure

Chip cards have far more sophisticated security features to help prevent fraud. That metallic square on the left side of your EMV card is actually a tiny computer chip that protects your data. This makes it extremely hard for anyone to isolate and extract. To get a hold of the data, a fraudster would have to somehow access the physical chip circuit and manipulate it to get your bank details. This would require sophisticated knowledge—as well as high-tech equipment that costs more than $1 million.

Chip cards have sophisticated encryption built right into the chip. When you insert a chip card, it talks with the payment terminal in an encrypted language to make sure everything checks out. For all of these reasons, chip cards are far more adept at both protecting your information and spotting fraud quickly.

EMV has proven effective in fighting fraud. Research firm Aite Group reports that losses from counterfeit, lost, and stolen cards in Canada dropped from $245 million in 2008 to $111 million in 2013.

EMV

What’s changed due to EMV technology

Accepting chip cards not only protects you against certain types of fraud and secure your business, but also make sure that you can securely accept your customers’ preferred form of payment.

Since the payment industry adopted EMV technology, a certain type of fraud is no longer covered. Specifically, it’s something called “card-present” fraud with a counterfeit EMV card. “Card present” means cardholders were physically present when they paid for something at your store.

If a fraudster comes in and pays with a counterfeit EMV card, and you process that transaction as a by keying in the number, you can now be held liable for returning these funds. If you inserted the card in an EMV reader, however, you would not be liable for the fraudulent payment.

Other secure payments technology

The fact that EMV transactions can be a bit sluggish will likely help accelerate the adoption of another new form of payment: NFC transactions. NFC stands for “near field communication” and refers to the technology that underpins “contactless” mobile payments like Apple Pay and Android Pay.

Contactless payments are authenticated payments—meaning they’re extremely secure and have a very low fraud risk. In a contactless payment like Apple Pay, your payments details are dynamically encrypted (through a technology called tokenization), which makes it near impossible for fraudsters to hack. They’re also protected by Apple’s fingerprint technology (Touch ID), so even if someone were to steal your phone, they wouldn’t be able to get at your mobile wallet.

Contactless

Apple Pay and other contactless payments are just as secure as EMV transactions but take a fraction of the time to process. They’re also extremely convenient, since they’re all through your mobile device (which is pretty much like an extra appendage these days).
The Square contactless and chip reader is just $59. What’s cool about it is that it can process both EMV and NFC payments—meaning you’ll be all set up for the next wave of secure payment technologies like Apple Pay.