EMV Chip Card Security
What is EMV?
If you’ve received a new credit card lately, you may have noticed a change in appearance. EMV chip card security, which stands for Europay, MasterCard, and Visa, the three companies that created EMV, is now being installed to ensure advanced data security. EMV chip card security is an integrated computer chip that offers an extra layer of protection by making the stored data extremely difficult to reproduce. The technology contains the same transaction abilities as the magnetic stripe on the back, but creates a unique code that can only be used once. This process helps to safeguard against hackers, since the magnetic stripe stores data that can be reprocessed infinitely.
How Does EMV Chip Card Security Work?
EMV technology differs from the standard magnetic stripe, instead of swiping the card, customers insert the chip into the Point of Sale (POS) terminal. The EMV chip, which contains data about the cardholder, communicates with the card issuing bank. Then, the transaction is encrypted and the terminal submits an authorization request. The bank reviews the request and communicates back to the terminal. Finally, the terminal will alert you that the purchase is complete and the transaction has been authorized.
How Does EMV Affect My Business?
As of October 2015, Visa, MasterCard and American Express all implemented EMV chip card security for POS terminals to protect cardholders from fraudulent activity. Any business that has not switched to EMV will put their company in financial risk. For example, customers can issue a chargeback, which is a dispute regarding fraudulent activity on their statement.
If businesses run an EMV chip card without the proper technology, the business owner will be liable for the dispute. To Switch to EMV, business owners need to add new payment terminals and payment processing systems that are compatible with this new technology.
EMV liability only applies to swipe transactions, and does not affect payments that are processed virtually.
Will EMV Terminals Still Work With Magnetic Stripe Cards?
Yes. When you switch to EMV enabled terminals, customers will still be able to make purchases regardless of card type. EMV cards are quickly replacing the magnetic stripe.
According to CreditCards.com, 70% of U.S. credit cardholders now carry an EMV chip card. However, the magnetic stripe puts consumers at a much greater risk of fraud because the information is fairly easy to obtain. EMV’s higher security levels make it much harder to steal credit card data.
Can I Process EMV Payment Cards Virtually?
Yes. There are many businesses that don’t use a physical terminal. You can still use EMV cards with a virtual terminal, but the EMV liability will not apply because there is not yet a way for websites to read EMV cards. However, businesses are only penalized for not using EMV when it was possible to do so; this means that Merchants who key in credit card information rather than swiping it, will not be responsible for EMV liability because these transactions are treated as a “Card Not Present” transaction, which is any transaction where the credit card is not swiped.
How Does EMV Secure My Funds?
EMV chip card security protects your business against chargeback disputes. If a customer disputes a purchase that was bought with an EMV card, and the merchant did not use the proper EMV technology, the business then becomes liable for the transaction. If you swipe an EMV chip card instead of entering its chip, you will almost always be liable.