Chips, Dip and Signatures… Oh My!

What your business needs to know about Smart Cards (EMV Cards) so you can keep your money in YOUR pocket. (Video below)

Most U.S. banks are already on-board with the new EMV technology, which stands for “Europay, MasterCard, and Visa”, the three companies which originally created the standard. The standard is now managed by EMVCo, a consortium with control split equally among Visa, Mastercard, JCB, American Express, China UnionPay, and Discover. New Credit cards have a super-small computer chip in them that’s extremely hard to counterfeit. If you’ve gotten a card recently, chances are you’re all set. But if you own a business that conducts debit and credit card transactions you might not be ready for the October 2015 deadline EMVCo has set for you to be compliant. And that could cost you a LOT of money.

First, EMV, is a technical standard for smart payment cards and for payment terminals and automated teller machines which can accept them. EMV cards are smart cards (also called chip cards or IC cards) which store their data on integrated circuits rather than magnetic stripes, although many EMV cards also have stripes for backward compatibility. They can be contact cards which must be physically inserted (or “dipped”) into a reader, or contactless cards which can be read over a short distance using radio-frequency identification technology. Payment cards which comply with the EMV standard are often called chip-and-PIN or chip-and-signature cards, depending on the exact authentication methods required to use them.

Now, let’s find out why the switch from magnetic-stripe to chips. This fact is just insane: Only a quarter of the worlds credit card transactions occur in the United States, but half of the world’s credit card fraud happens within our borders. Banks want to put a stop to that and believe that EMV technology will pave the way for much better security. And with all the recent security beeches banks have an added incentive to make credit and debit cards safer.

Visa, MasterCard and Discover in March 2012 – and American Express in June 2012 – announced their EMV migration plans for the U.S. In spite of these announcements, doubts remain over the willingness of merchants to develop the capability to support EMV. Since the announcement, multiple banks and card issuers have announced cards with EMV chip-and-signature technology, including American Express, Bank of America, Citibank, Wells Fargo, JPMorgan Chase, U.S. Bank, and several credit unions. JPMorgan was the first major bank to introduce a card with EMV technology, namely its Palladium card, in mid-2012.

  • American Express is implementing a liability shift for point of sale terminals in October, 2015. For pay at the pump, at gas stations, the liability shift is October, 2017.
  • Discover is implementing a liability shift on 1 October 2015. For pay at the pump at gas stations, the liability shift is 1 October 2017.
  • MasterCard is implementing a liability shift for point of sale terminals in October, 2015. For pay at the pump, at gas stations, the liability shift is October, 2017. For ATMs, the liability shift date is in October 2016.
  • Visa is implementing a liability shift for point of sale terminals on 1 October 2015. For pay at the pump, at gas stations, the liability shift is 1 October 2017. For ATMs, the liability shift date is 1 October 2017.

As a local merchant, how will EMV Cards affect you and your business? Well, if you only accept cash or checks, the October 2015 deadline won’t affect you at all. If, however, you accept debit and credit cards it could affect your bottom line significantly if you are not in compliance by the deadline.

What will you need?

You’ll need a new processing device to read the information in the chip cards and they are not cheap. In October 2015, if your businesses does not have an EMV processing device you could be liable for fraudulent chip card transactions.

While EMV may not impact your business right now, it soon will. Are you ready?

Chips, Dip and Signatures… Oh My!

by Editor time to read: 3 min