EMV Chip Cards: What Your Business Needs to Know

EMV® chip technology is the new standard for credit and debit cards in the U.S. The EMV phase-in began in October 2015, after years in which credit card fraud had been rising in the U.S. and declining in most of the rest of the world, where EMV was already in place. In the United Kingdom, for example, EMV technology cut fraud losses by 63 percent, according to Fraud the Facts 2011,¹ a report from Financial Fraud Action UK.

If you have not yet made the switch in your business, read the information below to take steps to do so.

What is EMV?
The name “EMV” stems from the companies that devised the payment standard: Europay, MasterCard^® and Visa^®. It centers on microchip-enabled credit and debit cards which are significantly more secure than traditional magnetic-stripe credit and debit cards.

The timeline
Banks started sending chip-enabled cards to customers in 2015. The first cards also include a magnetic strip so that they can be processed by non-EMV terminals. By the October 1 deadline, 32 percent of U.S. cardholders had chip-enabled cards, according to a survey by CreditCards.com.²

Yet the real pressure to adopt EMV technology comes from the shift in liability that is gradually occurring throughout the payments industry. Put simply, if a chip-enabled card’s information is stolen at your establishment because you are still only accepting cards via magnetic-stripe machines, your business — not the card issuer — would be liable to cover damages.

Key dates and liability shifts for fraudulent transactions include:

• October 2015: “Liability shift” goes into effect for in-person American Express, Discover, MasterCard and Visa transactions.
• October 2016: Liability shift deadline for MasterCard ATM transactions.
• October 2017: Liability shift deadline for Visa ATM transactions and for VISA and MasterCard automated fuel dispenser terminal transactions.

How it improves security
When a customer uses a microchip-enabled card for a transaction, it generates unique data that can never be used again. This makes the cards extremely difficult to clone. (Magnetic-stripe cards, on the other hand, save and transmit payment information in a form that is relatively easy to replicate.) EMV transactions also rely on more sophisticated encryption and authentication processes compared to magnetic-stripe card transactions. If customers use a PIN to make purchases, this provides a further layer of security.

What changes will you need to make
Your current point-of-sale (POS) terminal may be able to accommodate chip cards; if not, you will need to upgrade to a new reader. Your POS or merchant services vendor can help you determine this. If you use software for inventory tracking or other tasks that are tied to your card reader, you may need to upgrade these as well, along with any mobile card readers that you use. If many of your sales are online, consider protecting your business from “card not present” fraud by using fraud protection services offered by credit card companies. (Verified by Visa and MasterCard^® SecureCode™ are two examples.)

Why customer service matters
Getting used to the new machines takes a little adjusting, so a focus on customer service will help smooth your transition to EMV. Customers may insert their cards incorrectly into readers or even leave them behind, since EMV readers typically hold cards longer than magnetic-swipe terminals do. Increased transaction scrutiny may also result in rejected payments, which could frustrate customers. Educate your team about the hiccups that may occur and provide them with strategies to help customers through those frustrating moments.

As you look into security upgrades for your business, check out other guides from PG&E on topics such as energy-efficiency and money-saving tips. Download eBooks at PG&E’s eBook Library.

1. Financial Fraud Action UK, ”Fraud the Facts 2011.”
2. Creditcards.com, “Poll: Most cardholders lack smart-chip cards, despite deadline.”