Over the past two years, the way we use card payments in the US has undergone some big changes. Not sure you understand what EMV is, or why banks and credit card companies are making the switch? Here’s what you need to know about EMV and how the transition to EMV affects your small business.
EMV – What It Is
EMV stands for Europay, Mastercard and Visa. It’s considered as the global standard for debit or credit cards with embedded computer chip technology to authenticate transactions. You’ve probably noticed that your banks and credit card institutions issued you a new chip card, even if your card wasn’t close to expiration. That tiny square is the EMV chip that acts as a padlock to your financials!
More and more banks and lending institutions have moved towards EMV because of the increase in large-scale data breaches and escalation of credit card fraud. The chip improves the security of payments and makes it harder to breach, clone, or counterfeit cards. As a businessperson, this means that you’ll need new hardware to process EMV cards, which can range from $500-$1,000. To make it easier for your small business to make the switch, when you set up a new merchant services account with Vagaro, you’ll get a free EMV reader.
Why Are EMV Cards Better?
That shiny little square on your card is a powerhouse, don’t let its miniature size fool you! It’s like an itty-bitty computer in your card, increasing your security—as either a consumer or retailer. Your old card (debit or credit) stored static data on the magnetic strip on the back of the card. You know the stripe—over time, you might have had to tape it or hold a plastic bag over the stripe when you swiped it, if your card began to demagnetize. The ability to breach the data stored in that stripe is how credit card fraud spiked over recent years. A credit card counterfeiter would only need to copy the data stored on the magnetic stripe once to be able to clone the data multiple times, because the data didn’t change.
How Do They Work?
EMV cards are more secure because instead, the chip creates a unique code for each authenticated transaction which can’t be re-used. This process is called tokenization. It’s essentially like using a whole different card every time you make a purchase. As an example, even if a hacker were to breach a point of sale and steal the information from an EMV transaction, the data stolen wouldn’t be re-usable. The transaction would be denied. Each EMV “dip” (inserting the chip part of the card into the EMV reader slot) is uniquely coded for one-time use at a specific point of sale. As both a shopper and a salesperson, you’ve probably noticed that EMV dips take a little longer to process. But the benefit of card security makes those extra seconds worthwhile!
But What If Fraud Happens Anyway?
Depending on the updated terms and conditions of the card issuer, if point-of-sale transactions occur using a fraudulent, cloned, or counterfeit card, the card issuer generally assumes liability for the loss. Since the 2015 deadline set by the major US credit card issuers to transition to EMV cards, new regulations for credit card fraud liability have come into play. At present, most terms and conditions agreements stipulate that in a transaction where a fraudulent or compromised chip card was present (not an online transaction), liability for fraud falls on the party least EMV-compliant in the transaction. What does this mean, exactly? The cost of fraud falls on the merchant. If you haven’t updated your hardware to an EMV reader, if you swiped a compromised EMV card, you’d be liable for the fraud. It’s simply not worth the risk, especially when if you switch to Vagaro Merchant Services, we’ll send you an EMV reader to get your new account started on the right foot.
EMV for You & Me
Even with the added benefit of EMV, remember to stay watchful in your business, because you know the saying: For every lock, there’s a lockpick! And while EMV is today’s gold standard, tomorrow might bring new gold standards. For now, EMV readers mean fewer chargebacks, and it’s easier to validate the authenticity of a transaction when EMV was used to process it. Despite the sometimes-steep cost of EMV hardware, as a small business owner, it’s important to make sure your point of sale is secure and up-to-date with technology that your customers will expect. And while we all know that nothing is infallible—know that wherever merchant services head next, Vagaro will be there with solutions to help you meet your business goals and keep your bank account safe.
Ready to get your Free EMV Chip Card Reader? Sign up for a new merchant services account with Vagaro! We’ve got competitive rates, transparent practices, and our support team is here when you need us!
Header Image via Vagaro