Editor’s Be aware: That is “Half 1” of a 2-part collection.
This text is principally for brick-and-mortar retailers. The upcoming October 2015 rule adjustments relating to EMV-enabled bank cards are particular to card-present retailers. However ecommerce retailers ought to perceive what EMV entails, as some service provider account salespeople have tried to use EMV to card-not-present accounts, akin to ecommerce transactions.
I’m penning this as a result of I discussed EMV playing cards in “B2B Retailers Typically Overpay for Card Processing,” my November 2014 article. That generated questions and considerations from brick-and-mortar retailers concerning the EMV misinformation being distributed by some processors and salespeople.
Subsequently, the purpose of this text is to make clear how acceptance of EMV playing cards and the upcoming rule adjustments will impression card-present retailers and the choices they should make earlier than October 2015. (For a background on EMV, learn “Credit score Card Processing: October 2013 Fee Modifications, EMV Terminals,” my article from 2013.)
What Is ‘EMV’?
You will have observed {that a} excessive share of newly issued credit score and debit playing cards within the U.S. now have a microchip embedded within the plastic. Whereas this chip is new to the U.S., playing cards issued in lots of different nations have had an embedded microchip for years. The aim of the microchip is to scale back the worth of stolen card information and the benefit of conducting counterfeit transactions.
EMV-enabled bank cards have a microchip inserted within the plastic. Supply: Visa.
EMV stands for “EuroPay, MasterCard, Visa,” that are the three corporations that initially developed the requirements for chip card processing. Within the bank card trade EMV is synonymous with the foundations governing acceptance of chip card transactions. These guidelines make chip playing cards and point-of-sale units appropriate all over the world.
The cardboard corporations notice that the magnetic stripe expertise used on U.S. bank cards for the previous few a long time not has enough safety. To conduct a fraudulent transaction, criminals want solely the data discovered on the magnetic strip. This data might be skimmed off a person card with a fundamental machine or it may be obtained in mass portions by hacking into service provider and supplier databases. Because of this service provider adherence to PCI DSS — Fee Card Business Information Safety Requirements — is so vital for the cardboard corporations.
Embedding a microchip on the cardboard supplies an vital additional stage of safety to scale back the worth of stolen card information. The chip permits cryptographic processing. whereby every transaction has dynamic, distinctive authentication. This reduces the potential for a fraudulent transaction. But it surely signifies that U.S. retailers should have point-of-sale units that may course of the encrypted data for this additional stage of safety to work.
EMV: What U.S. Retailers Have to Know
There’s a lot misinformation from some service provider account suppliers about EMV. Sadly, some retailers that don’t even course of EMV playing cards at the moment are shopping for and leasing gear from these suppliers. Right here is the data retailers must learn about EMV and the October 2015 rule adjustments that have an effect on card-present retailers.
At the moment, most card-present counterfeit card losses are the duty of the financial institution that issued the cardboard. Nevertheless, on October 1, 2015 the cardboard corporations are altering the foundations. As of that date, the entity accountable for the EMV data shall be held financially accountable for sure card-present counterfeit losses. That signifies that if the financial institution issued a card with out the microchip, it could be accountable for any card-present fraudulent card losses. Nevertheless, if the cardboard had the microchip and the supplier didn’t course of the data, then the supplier could also be accountable for any losses.
What retailers want to know is that the supplier will go any such loss onto the service provider if the service provider didn’t have gear able to processing the EMV data.
Additionally, perceive that chip playing cards will nonetheless have the magnetic stripe on the again of the cardboard, so retailers with out the EMV POS units can nonetheless course of transactions. The cardboard corporations usually are not forcing retailers to put money into POS units that may course of an EMV transaction. Nevertheless, they’re utilizing a fairly large stick by way of the counterfeit fraud loss rule adjustments to encourage retailers to put money into POS units that may course of EMV transactions.
Settle for Monetary Duty, or Not?
Subsequently, each card-present service provider must decide: Does it wish to tackle the duty for counterfeit card losses or does it wish to put money into gear that may course of EMV transactions? Companies ought to make this choice properly forward of the October 2015 deadline, to make sure they will acquire the wanted gear if essential.
Nevertheless, there are extra selections every service provider might want to make ought to it put money into the EMV gear. Retailers must determine in the event that they wish to incorporate NFC (close to area communication) or Apple Pay and different such applications that enable the client to position the cardboard or cellphone close to a receiving machine to acquire the chip card data, versus inserting the cardboard within the POS machine. Retailers additionally want to know that some card issuers might require cardholders to key-in a PIN quantity with the chip card transaction and a few issuers might solely require the signature. Which means a service provider might must put money into an EMV PIN pad as a result of location of the POS machine so the client has some privateness when inserting her PIN quantity.
I’ll tackle this and different selections retailers must make in subsequent month’s article — see “EMV Credit score Playing cards, Half 2: Level-of-sale Units, Options.”
