Credit card fraud is rampant and something you definitely want to be on the look out for in your business. There is a new weapon on the market, one that you need to know about. EMV, which stands for EuroPay, MasterCard and Visa, is a new industry standard of embedding credit cards with a smart chip. It was released in the United Kingdom in 2002 and has proven effective at thwarting would-be thieves. It has quickly taken hold in Europe and is gaining ground in the United States. Here is what you need to know to prepare your business for EMV.
How Does EMV Work?
Currently, all credit card information is stored on the magnetic strip on the back of the card. It’s a simple technology and the information is easy to steal with a simple swipe. In fact, there is even technology that allows thieves to steal credit card information just passing you on the street. It’s a faulty system and is quickly being phased out.
With an EMV card, the card information is stored in an embedded microchip. These cards will require new Point of Sale (POS) terminals that can read the chip and verify the cardholder’s identity. In time, Europay, Mastercard and Visa will stop offering merchants benefits and fraud insurance if they have not converted to the EMV system.
Why Switch Now?
At the beginning of 2012, Visa began extending its Technology Innovation Program (TIP) in the United States. The program includes waiving certain audit requirements for merchants that have switched to primarily EMV terminals that support contact and contact-less payments, including mobile payments. A failure to switch to the new EMV standard by 2015 will result in merchants being responsible for charges related to credit card fraud; not the bank who issued the card.
What Do I Need to Do?
The new EMV standard will require you to get new POS terminals that can read the EMV chips. You can contact your credit card processing specialist or an independent merchant services provider to determine what terminals will work for you. Make sure the terminals you purchase support the contact-less and mobile features required for the TIP program benefits. The new terminals can cost 10 – 30% more than the traditional models, so you may choose to roll out implementation sooner rather than later to ensure you are ready for the new 2015 rules.
Is There an Upside to My Business?
Besides reducing fraud, these microchips are mini computers and offer many compelling features. This technology is just beginning to evolve and many features and functionalities are yet to be discovered. Once such feature is the ability to have more information about customer spending habits. This information will be stored directly on the microchip, which will help merchants provide their customers with personalized shopping experiences.
Small businesses are a big part of this transition to EMV standards. It’s important you become educated about the technology and its effect on your business, and take the time to do a full assessment of the cost of transition. The change is coming … Will you be ready?