EMV "Chip" Compliant Processing
In October 2015, the introduction of EMV in the US reached a major milestone. This is when liability for fraudulent payments shifted to non-EMV merchants who are unable to process transactions when a chip card is presented for payment. This liability shift could have a major impact on businesses (both large and small) that are unprepared. EMV is one of the biggest changes to happen in the payments world in a long time. EMV, also known as chip cards, is a series of specifications that define a more secure method of payment. It was developed jointly by Europay, MasterCard, and Visa in the mid-1990s.
How does It work?
EMV introduces a small computer or “chip” to every payments device. This chip stores information, performs processing, and contains secure keys that generate cryptographic data. Dynamic data is generated with each transaction, making it nearly impossible to create counterfeit cards or replay intercepted transactions.
What are the benefits of chip cards?
Chip cards are designed to protect against counterfeit fraud through authentication of dynamic data generated by chip cards, smart phones, and other EMV-compliant devices. They also provide risk management parameters at the card level and when used with PIN, can offer protection against lost and stolen card fraud.
How does this affect my business?
As of October 1, 2015, if a customer presents a chip card for payment to a non-EMV merchant and is unable to process that transaction using EMV, that merchant may be liable for any fraud that occurs. Because chip cards require dynamic authentication, an EMV capable terminal is required with a special reader designed for chip cards.What is EMV?
EMV chip technology is becoming the global standard for credit card and debit card payments. Named after its original developers (Europay, MasterCard® and Visa®), this technology features payment instruments (cards, mobile phones, etc.) with embedded microprocessor chips that store and protect cardholder data. This standard has many names worldwide and may also be referred to as: “chip and PIN” or “chip and signature.”What is chip technology?
Chip technology is an evolution in our payment system that will help increase security, reduce card-present fraud and enable the use of future value-added applications. Chip-enabled cards are standard bank cards that are embedded with a micro computer chip. Some may require a PIN instead of a signature to complete the transaction process.
What makes EMV different than the traditional magnetic stripe card payment?
Simply put, EMV (also referred to as chip-and-PIN, chip-and-signature, chip-and-choice, or generally as chip technology) is the most recent advancement in a global initiative to combat fraud and protect sensitive payment data in the card-present environment. Payment data is more secure on a chip-enabled payment card than on a magnetic stripe (magstripe) card, as the former supports dynamic authentication, while the latter does not (the data is static). Consequently, data from a traditional magstripe card can be easily copied (skimmed) with a simple and inexpensive card reading device – enabling criminals to reproduce counterfeit cards for use in both the retail and the CNP environment. Chip (EMV) technology is effective in combating counterfeit fraud with its dynamic authentication capabilities (dynamic values existing within the chip itself that, when verified by the point-of-sale device, ensure the authenticity of the card)
What other incentives are there to accept chip cards?
In addition to the reduction of fraud and related chargebacks, there are other cost savings associated with EMV acceptance. The payment brands are doing their part to ensure that chip-bearing customers can pay at chip-enabled businesses. For example, Visa, MasterCard, Discover and American Express have all issued upcoming rules and guidelines for processors and merchants to support EMV chip technology. The Payment Brands have introduced programs that waive a merchant’s annual PCI-DSS audit if 75 percent of the respective payment brand specific transactions are processed through a dual contact and contactless EMV certified device.
Another Payment Brand ruling is the impending chip liability shift. Once this goes into effect, merchants who have not made the investment in chip-enabled technology may be held financially liable for card-present counterfeit and potentially lost and stolen fraud that could have been prevented with the use of a chip-enabled POS system.
http://uscardsystems.com/emv/ "EMV - Credit Card Processing and Equipment | US Card Systems"
https://en.wikipedia.org/wiki/EMV "EMV - Wikipedia"