The Shift to EMV – Are You Ready?

Starting Oct 1, 2015  changes in fraud liability laws could put merchants that don't support EMV cards at risk.

Starting Oct 1, 2015 changes in fraud liability laws could put merchants that don’t support EMV cards at risk.

As a business owner there are two questions you need to ask yourself. Are you ready to accept chip/smart or EMV (Europay, MasterCard®, Visa®) cards, and are you prepared to protect your business after the liability shift?

On October 1, 2015, a liability shift will be effective for fraudulent card present losses which could have been detected through the smart/chip card/EMV terminals. This means if a business accepts and processes a counterfeit card transaction on a non-EMV terminal the business will be liable for the loss. Currently the liability falls on the credit card issuer.

Why the Change? A few statistics from Business Insider.

• $7 BILLION: The cost of Credit and Debit card fraud related losses in the United States in 2013
• 51%: The amount of global credit card fraud attributed to the United States in 2013.

 
In order to protect your business from potential card fraud liability, you will need an upgraded EMV enabled terminal solution.

While card issuers across the US continue to replace the traditional magnetic strip cards, the EMV terminals will still support the legacy cards through the transition. In addition, many EMV terminals are also NFC enabled which enables mobile wallet payments such as Apple Pay ™, Visa PayWave®, MasterCard Pay Pass™ and American Express® ExpressPay.

This means you can accept more types of payments securely, making payments easier for you and your customers. For a quick and easy overview of the liability shift take a look at the infographic provided by Visa® http://www.elavon.com/~/media/Images/Documents/VISA_LIABILITY_SHIFT_FINAL.PDF

EMV FAQs

  • What is EMV? EMV (an acronym for Europay, MasterCard® and Visa®) is a global technology standard for payment cards. An EMV terminal will communicate with the chip on the EMV card (commonly referred to as a Chip Card) at the time of acceptance to validate the authenticity of the card with the entity which issued the payment card.
  • How do Chip Cards Work? Instead of consumers swiping a credit card as they do today, consumers will insert the chip enabled card, chip side up, into an EMV terminal. The terminal will then read the chip on the card to ensure that the card is valid. The card will stay in the terminal until the transaction is complete.
  • How do I know if my chip card is Chip and PIN or Chip and Signature? The card issuer determines if your card is Chip and PIN or Chip and Signature. If you have a Chip and PIN card, your chip card will require you to enter your PIN code during the EMV transaction. If you have a Chip and Signature card, your chip card will require your signature at the end of an EMV transaction.
  • Why do I need EMV? To reduce counterfeit card fraud! Upon implementation of EMV in the United Kingdom, payment card fraud rates immediately dropped by 25%! By accepting chip cards you help protect your business from card fraud liability and prepare your business for the future payment application technology.
  • Why haven’t I seen a chip card yet? With the United States being one of the last countries to adopt this technology standard consumers with a chip card may assume businesses are not setup yet to accept their chip card. Today there are more than 1.5 billion chip cards used around the world and this number will rapidly increase as banks continue to issue more chip cards to their cardholders in the United States.
  • Are banks currently issuing chip cards in the United States? Yes. Most large issuers have been providing chip cards to people that travel internationally for the past few years. With the upcoming liability shift scheduled for October 2015, issuance for domestic use is expected to accelerate over the next year.
  • Why do I need an EMV terminal if my current terminal works fine? Your current terminal may function correctly for magnetic stripe cards, but an EMV terminal is required to support chip enabled cards. In order to protect your business from potential card fraud liability, you will need an upgraded EMV enabled terminal solution.
  • Can I still accept magnetic stripe cards with an EMV enabled terminal? Yes. The new EMV enabled terminals are designed to accept EMV chip cards and magnetic stripe cards to help during the transition to EMV. With a new EMV enabled terminal you won’t need two terminals for both types of payment cards.
  • What is the difference between an EMV capable and EMV enabled terminal? An EMV capable terminal will need a software upgrade or enhancement to become EMV enabled.
  • What if I decide not to upgrade to a new EMV enabled terminal? The Payment Card Networks have announced that on October 1st, 2015*, counterfeit fraud liability, which has traditionally been losses incurred by the card issuer, will be assumed by any merchant customer that does not have EMV enabled equipment capable of detecting the fraudulent card. This means, by the date, if your business accepts and processes a counterfeit card transaction on a non-EMV terminal, the liability for that fraudulent transaction is yours, not incurred by the card issuers.

Thanks to Iroquois Merchant Services for putting this overview together for our clients! Visit them online at www.IroquoisMerchantServices.com