Through superior and effective algorithms and complex processing methods, the EMV chip technology is bringing significant security and eliminating threat to credit and debit card users across the globe. EMV chip technology brings safer transactions, both online and in person, along with a more thorough authentication process, and reduced identity theft risk. Spark Business IQ, Lou Morsberger, outlines the benefits and drawbacks of migrating to EMV technology standards.
Part Two in a Three-part Series
If your business accepts plastic credit or debit card payments, it’s time to take a closer look at EMV chip technology. As payment issuers across the country replace traditional magnetic stripe cards and terminals with new systems, business owners need to know about the benefits and drawbacks that EMV chip technology migration may create.
Secure, Convenient, and Global
Perhaps the biggest benefit to businesses and consumers is that chip cards are more secure than magnetic stripe payment cards. Fraudsters find it difficult and expensive to steal and use data from chip-enabled cards.
EMV transactions do not require authentication with a PIN. In fact, most transactions will be authenticated exactly as they are today. A chip-enabled card is very difficult to counterfeit, so the chip itself validates that the card is legitimate. This deters counterfeit fraud. A PIN goes a step further by also validating the user (whomever has the card in their possession) and so discourages “lost and stolen” fraud, i.e., where the card owner no longer has possession of the card.
Whether a PIN is required for a given EMV card is determined by how the issuer has configured the card up front and by which CVM (cardholder verification method) the merchant has programmed into its card readers. Online PIN and offline PIN are two CVM options, but other options include “signature” and “no CVM”. Some merchants prefer no CVM because it avoids their having to ask the customer for the follow up step of a signature or PIN. In high-volume and/or low ticket price environments, the chip has already reduced fraud risk so much that the merchant expects the PIN or signature processes to cost more than it would save by adding the extra step to prevent “lost and stolen” fraud.
Improving Consumer Experience
The additional security bolsters consumer confidence, according to our partners at Visa. In 2013 alone, credit card and prepaid debit card fraud cost $157 billion, reports the Federal Reserve.
EMV chip technology can also improve global interoperability and increase authorizations. Both factors improve the consumer experience.
The experience of smoother global payments processing is an important consideration for Rancho de los Cabelleros, an historic guest ranch resort and golf course near Vickenberg, Arizona.
“The majority of our guests pay with a credit card,” says Rick Hamilton, the ranch’s general manager. Hamilton sees EMV chip technology and online reservations as a simple and secure combination to help foreign, non-English speaking guests make reservations.
Saving Time and Money Long Term
In addition to security benefits, EMV chip technology may save business owners time and money through incentives such as the Technology Innovation Program (TIP).
As of October 1, 2012, merchants that process at least 75 percent of their transactions via a Dual Interface Terminal (an upgraded POS terminal that processes both contact and contactless payment cards, mobile devices and wallets, as well as traditional magnetic stripe cards) may waive their annual Payment Card Industry Data Security Standard (PCI DSS) validation.
Drain on Resources?
Businesses must allocate time to assess the current capabilities of their payment systems, as well as EMV system upgrade requirements. This may involve contacting your POS provider, arranging a meeting, and preparing for and accommodating installation – plus paying for it.
Hamilton is assessing Rancho de los Cabelleros’ current electronic payment system to determine what’s required for an EMV technology upgrade. He sees the time, expense, and work involved as an investment in improving the customer’s experience.
“You can’t look at any business activity as being inconvenient when it improves the reliability and security for your customers,” he says. “And after all, we’re in the hospitality business. We want to make life smooth and easy for our guests.”
Regardless of the specific configuration, EMV chip technology means businesses across the country will have a faster and more secure way to accept payments from customers, boosting consumer confidence. Ultimately, this may lead to more business for you as clients find it simple, secure, and quick to pay for your goods or services.
Want to learn more about EMV chip cards and business? Part one in our series covers EMV chip technology basics for small business owners, and part three outlines the steps to take to prepare your business for the new payment technology.
EMV chip technology only works to prevent counterfeit fraud when both the merchant and cardholder use EMV technology.
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