What the EMV Chip Means (and Doesn’t Mean) for Your Company

If you have been getting strange calls from companies claiming to be in the card processing industry, please use caution. Many of our clients have been told that the EMV chip, which will soon be placed in all newly-issued credit/debit cards, will drastically and expensively change the way cards are processed.

Simply put, this isn’t true.  Below is a short list of facts you’ll need to know before the EMV chip is fully implemented. We encourage you to read the more detailed explanations that follow:

• EMV chips make credit/debit cards more secure.
• Credit/debit cards implanted with the EMV chip will still be readable via magstrip until all merchants have switched fully to the EMV chip-enabled cards.
• EMV chip-enabled cards have been used in European countries for over two decades.
• Most card processors from 2009 or later already have the ability to read EMV Chip-enabled cards.
• If you need a terminal for processing EMV chip cards, you may purchase one from us for $250-$300.

What is EMV?

EMV chip technology is becoming the global standard for credit and debit card payments. This smart chip technology features payment instruments (cards, mobile phones, etc.) with embedded microprocessor chips that store and protect cardholder data.

What is chip technology?

The chip technology standard for payment was first used in France in 1992. Today, there are more than 1 billion chip cards used around the world. The U.S. is one of the few industrialized nations that has not fully transitioned to this technology standard.

Chip technology will help increase security, reduce fraud, and enable the use of future value-added applications. Chip cards are standard bank cards that are embedded with a micro computer chip.

What makes EMV different than the traditional magnetic stripe card payment?

A chip payment card looks just like a traditional card with an embedded chip in addition to the standard magnetic stripe on the back of the card. What you see on the card is not the actual microchip but a protective overlay. The microchip provides an additional level of authenticity for the transaction.

Simply put, EMV is the most recent advancement in a global initiative to combat fraud and protect sensitive payment data. A cardholder’s confidential data is more secure on a chip-enabled payment card than on a magnetic stripe (magstripe) card, as the chip supports dynamic authentication, while the magstripe does not (the data is static).

Consequently, data from a traditional magstripe card can easily be copied (skimmed) with a simple card reading device—enabling criminals to reproduce counterfeit cards for use in both retail and CNP environments.

What other incentives are there to accept chip cards?

In addition to the reduction of fraud and related chargebacks, there are other cost savings associated with EMV acceptance. Visa and MasterCard have issued upcoming rules and guidelines for processors and merchants to support EMV chip technology.

Visa is introducing their Technology Innovation Program (TIP) to the U.S. region, which waives an annual PCI-DSS audit if 75 percent of the merchant’s Visa transactions are processed through a dual contactless and contact EMV certified device.

MasterCard is introducing their PCI-DSS Compliance Validation Exemption Program to the U.S. region, which also waives the annual PCI-DSS audit if 75 percent of the merchants’ MasterCard transactions are processed through a dual contactless and contact EMV certified device.

Another Visa and MasterCard ruling is the liability shift. Once this goes into effect, merchants who have not made the investment in chip-enabled technology may be held financially liable for card-present fraud that could have been prevented with the use of a chip-enabled POS system.

Why should I invest in chip card acceptance now?

Preventing the growth of fraudulent activity is one of the main reasons the industry is moving toward EMV technology. Chip cards make it difficult for fraud organizations to target cardholders and businesses alike. As a result, more and more chip cards are being introduced by U.S. financial institutions in order to support and switch over to this technology.

Are there any best practices for EMV migration?

• Don’t wait to migrate.

You may begin to feel the pressure once the EMV card migration starts to reach its critical mass—with issuing banks beginning to issue chip cards to new and existing customers. Businesses that have not already migrated to EMV may consequently have to answer to their customers as to why they have to continue to swipe their new chip card—especially when chip technology is the safer way to pay. Don’t wait until the last minute to migrate your business.

• Get a business plan together even before implementation begins.

As equipment upgrades have the potential to be both costly and time consuming, it’s best to get started early. Figure out how much it’s going to cost, how long it’s going to take, and plan accordingly. You will want to take a hard look at the cost vs. benefits of EMV.

• Training and product awareness at both the business and the employee level are crucial to a successful implementation.

As EMV acceptance is very different compared to the traditional magstripe (the card is inserted into the terminal as opposed to swiped, for example), it is imperative that everyone is familiar with the new requirements to make the customer experience as smooth as possible.

Will I still be able to accept traditional credit and debit cards?
The Future Proof terminal has a magnetic stripe swipe reader and you can continue to accept payment cards that are not chip-enabled.

Chip cards will still have a magnetic stripe during the U.S. migration to EMV, to ensure that customers can continue to pay both ways until all merchants have upgraded their equipment.

Am I required to support EMV?

No, you are not required to support EMV in the U.S. region at this time. However, even if your organization hasn’t been targeted by high levels of card-present fraud in the past, you may be putting yourself at risk in the future, as fraud will migrate to the weakest technology (magnetic stripe). Therefore, you may want to ensure that all your terminals are chip-capable and that your payment processing application can support chip card acceptance. Most terminals deployed in the last five years are already chip-capable, indicating that you may be ready to accept these cards right away.

What if I have more questions?

Contact Motus Financial at 608-819-8666. We have EMV (chip acceptance) terminals that can help you upgrade to accept chip cards from customers.  The cost for an upgraded terminal is $250-$300.