Do you really need an EMV POS Terminal?

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2015_04_02EMV stands for “Europay, MasterCard and Visa,” which set out to create a world-wide standard with increased fraud protection for credit cards and terminals.  This technology has been readily available in Europe since 2005 and will become the standard in US in October 2015.  The technology involves two parts – Chip cards and EMV enabled credit card point of sale terminals.

“Chip cards” or “Smart cards” are credit cards with an embedded microprocessor chip that stores and protects credit card data.  In contrast to the magnetic stripe, which provides static encrypted card information when swiped, Chip card technology provides dynamic encryption.  Each time the Chip card is used in a transaction with an EMV enabled terminal, the verification data varies, thus making it more difficult to copy.  While fraud is not eliminated, it is more complicated and expensive for the Chip cards and data to be counterfeited.

The EMV terminal will look similar to today’s point of sale devices.  The terminals will still have a magnetic stripe reader on the side to allow for non-chip cards during the transition.  The EMV feature is a slot at the bottom of the terminal to insert the Chip card.  The Chip card will be inserted into the terminal slot, face up/chip side first, and remain in the terminal while following prompts to complete the transaction.  During the transaction, data flows from the Chip card to the financial institutions to verify the card and create the dynamic transaction.

A merchant is not required to adopt the EMV technology and have an EMV enabled point of sale device, but there will be a liability shift.  Starting in October 2015, the merchant may be liable for any counterfeit activity that stems from the magnetic stripe transaction.  Thus, if a customer pulls out a Chip card and the merchant swipes the magnetic stripe because the EMV slot is not available, the merchant may be liable for any fraud that occurs related to that transaction.

When should a merchant obtain an EMV point of sale terminal? 

Technology and options will continue to improve with time, meaning that more EMV terminals will be available for lower cost as we get closer to October 2015. Potential situations suggesting moving to an EMV terminal sooner than later include merchants:

  • who want their business to be viewed as fraud conscious and take the step as soon as possible,
  • seeing a lot of Chip cards at their business,
  • whose current terminal is having difficulties,
  • changing merchant providers for better terms or fees.

Jennifer Autian is the founder of TCA Business Solutions and an independent representative of merchant services.  To learn more about EMV technology or explore other payment processing options, connect with her at 678-523-8760 or by email at Jennifer@tcabiz.com.

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