Liability for credit card fraud is about to shift to those that don’t accept EMV cards. Here’s why this is important for you to understand and how to streamline the transition.
The New EMV Cards
The new EMV cards are also referred to as “smartcards.” Hey, these days everything is smart, right? First there were smartphones, then smart T.V.s – why not smartcards? The truth is that this technology has been around for a while and, while many U.S. banks failed to adopt it, it’s been available in Europe for years. EMV stands for Europay, MasterCard, and Visa.
The new cards will be fitted with a small computer chip that’s incredibly difficult to fake or counterfeit. With magnetic striped, one of the biggest problems is the ease with which they can be demagnetized and faked. It’s also easy to steal information by placing a special device between the card terminal and you.
In some cases, this device, called a “skimmer,” is not fixed to a terminal at all, but is pocketed by the thief.
When you hand over your credit card or debit card, to a person (like a waitress), and the person wanders off with it to process the transaction, he or she can swipe your card using a legitimate terminal. Then, the person can swipe it a second time through a skimmer, which is the size of an ice cube.
The skimmer stores information stored on the magnetic strip. Then, the thief can use this information to make a fake card and use it to scam you out of all the money in your bank account.
Because banks are insured, the thief may never feel real remorse for having stolen your money.
Skimmers can be retrofitted for ATMs, petrol station card readers, parking meters, vending machines, and anyplace else that has unmanned terminals.
Newer EMV cards won’t be fooled by these skimmer machines. And, since half of the world’s credit card fraud happens in the U.S., this means that EMV smartcards could make doing business much safer, lower the costs for terminal and transactions, and help you put more money in the till.
EMV cards don’t work unless you enter a pin or sign for the purchase at the time the transaction takes place. Because the information is stored on a chip, and the chip must communicate with the card reader during the transaction, stealing the card information isn’t really all that valuable without your pin and signature.
Getting New Terminals
Of course, to process these new cards, you’ll need a new card reader. Rather than swipe credit card information, you’ll be “dipping.” Cards are inserted into a card reader. Then, the terminal collects the card information.
Customers sign for the transaction and they’re on their way. If you’re still using an old terminal, you’ll be able to process swipes as many cards will still use a magnetic stripe. But, this guide to renting card machines can help you when it’s time to upgrade.
Why It Matters
Security is a very big deal. While merchants are already required to do quarterly scans and a self-assessment for PCI compliance, card issuers and merchant service companies are keen to lower the risk even further.
Customers also want more secure credit and debit cards.
Charges For Old Terminal Swipes
If you still want to run old swipes on cards with magnetic strips, you can do so. However, the merchant service provider will likely charge you a higher per-transaction fee or swipe fee as these will now be more risky than the EMV dips.
Phillip Henshaw is a business consultant. Working from home he is able to advise customers on all aspects of accepting payments and takes great pride in knowing his articles are helping and informing a wider audience online.