EMV Chip Regulation: What It Means For Your Small Business
The ways we pay have changed in a huge way over the last few years, and the US has finally jumped on board by implementing EMV standards across the country. Magnetic strips on the backs of many of our credit cards are one of the largest security issues we encounter in our daily lives. It’s increasingly common that cards are being duplicated because the technology has been used for such a long time and there’s no real process to make sure the person who possesses the card is who the card actually belongs to.
Canada and Europe have been using EMV standards for years, and they have proven that with a new system, credit card fraud can be drastically reduced. With the US moving toward these new security standards, this could mean a significant shift in the global market, making it even more important for your small business to get in compliance with these new standards.
An Introduction to EMV
The name of the new standards doesn’t do much in explaining what it actually looks like: EMV stands for Europay Mastercard Visa—the three companies that created the chip and pin standard. Ten years ago the rate of Credit Card fraud was astronomical, and much of the responsibility to pay back the fraudulent charges to the customer fell on the card companies. In 1994 Europay Mastercard Visa devised a way to not only decrease the amount of credit card debt but potentially reduce the losses that their companies were seeing from this kind of fraud. This is where EMV standards were born. EMV utilises microchips that are embedded into the card and requires a second form of authentication to make it more difficult to purchase things with a duplicated card. As card technology changes the terminals they are used in also need to be changed and as you can imagine it can be incredibly hard to get thousands of businesses to update their point of sale systems to meet these requirements.
Encouraging Small Business Adoption
The main way to encourage businesses to install newer point of sale equipment was the liability shift. If a customer has a chip-enabled card and the place of business does not have the option of the more secure form of payment, they become liable to return the money that was taken to the customer. If the place of business has an EMV-enabled point of sale system and the customer decides to swipe their card, or they do not have a chipped card the credit card companies become liable for fraudulent funds.
Early EMV Struggles
Canada officially began the liability shift in 2010, and the US could learn a great deal from the bumps in the road that Canada experienced when they first began adopting these standards. Canada found it incredibly difficult to retrain people to use the chip instead of swiping their card. They also had a large issue with people leaving their cards in the POS system altogether. After these issues had been found, updates to the POS system that prompted users to put the card into the chip reader after a swipe and audible indicators that the card was still in the machine after the process had finished were put into place.
Avoiding Fraud Liability
Canada has had EMV standards in place for quite some time and has seen incredible success reducing our rate of credit card fraud. With the US moving toward these same standards, this is just one more reason to make sure that you aren’t held liable for fraud charges on any customer’s cards. If you haven’t already updated your point of sale systems to meet the standard of chip-n-pin, it is extremely important to do so now as more and more countries are pushing to make Chip and NFC payments the way consumers pay.
