The United States is currently transitioning to a different type of credit card — a chip card (also known as an EMV card). If you’re just hearing this news, here’s a quick rundown: We’re in the process of sunsetting the magnetic-stripe cards we currently carry because they’re (extremely) outdated and therefore very easy to counterfeit. EMV, on the other hand, is a much more secure way to pay and to process payments. In fact, countries that have already adopted chip cards as the standard (the U.S. is actually pretty late to the EMV party) have seen a dramatic reduction in certain types of fraud.
Unfortunately, fraud is now particularly rampant in the United States. One only needs to look to the high-profile security breaches over the last couple of years for an example. So we’re fast-tracking the adoption of chip cards in an effort to curb this. The banks are now issuing new cards equipped with chips en masse. Chances are, if you’ve received a new card from your bank recently, it’s an EMV card.
What does all this mean for businesses? Well, sellers are being asked to do their part in this effort by upgrading their payments terminals to accept the new chip cards. And there’s a bit of a fire under this — something called the liability shift. As of October 1, 2015, if your business isn’t set up to accept chip cards, you could be on the hook for certain types of fraudulent transactions. (Read a simple breakdown of which types of fraud apply to the liability shift.)
To make your business EMV compliant, you’re going to need a new credit card reader. That’s because chip cards are processed differently than magstripe cards. Whereas a magstripe card is swiped horizontally across the reader, chip cards are inserted vertically, chip side down.
Luckily, this doesn’t need to cost your business an arm and a leg. You can quickly get set up to accept chip cards with affordable solutions like the Square contactless and chip reader, which costs $49.
One thing to note, however, is that chip cards actually take longer to process than magstripe cards, something you’ve probably experienced if you’ve paid via EMV at larger retailers like Target. But it’s all in the name of making the transaction as secure as possible. What’s happening when the chip card is inserted into the reader is that it’s talking back and forth with the payments terminal to make sure everything checks out (aka there’s no fraud). As opposed to magnetic-stripe cards, which just broadcast bank information to the terminal as-is, EMV transactions are dynamically encrypted. This means that even if a fraudster were to get into the card, it’d be near impossible to isolate and extract any meaningful data.
Once you get a chip card reader in the rotation, you’ll be all set up to accept the latest, most secure form of credit cards. But before you start taking EMV payments, you’ll want to huddle up with your staff. First, train them to scrutinize each credit card before processing a payment. Though chip cards come equipped with a magstripe on the back, you can recognize them from a little chip that appears on the card. When your staff spots that, make sure they process the card as an EMV transaction.
You’ll also want to train them on what to say when a chip card is being processed — as all of this may be new to your customers as well. As mentioned, chip cards need to be dipped into the reader for the entirety of the transaction, so make sure the customer doesn’t try to grab it before everything’s all processed. You may also tell your staff to say something like “It takes a little longer.”
The fact that chip cards take noticeably longer to process may be part of what accelerates the adoption of faster forms of payment like mobile wallets. These “contactless” payments (like Apple Pay, for example) are just as secure as EMV transactions but much speedier. In countries that have adopted EMV as the standard, we’ve seen an acceleration in the adoption of contactless payments. The Square contactless and chip reader accepts both EMV and NFC transactions, so you’ll be ready to accept any of the new, more secure forms of payment that come across your counter.
A Simple Guide to the Liability Shift (Infographic)
5 New Payments Terms You Need to Know
Wny is EMV More Secure?