EMV transactions: Is it time for you to upgrade?

Even if your business has not yet adopted an EMV-enabled solution, you’re probably somewhat familiar with the technology since it's among the most talked about developments in payments. EMV has proven to be an effective tool to fight card present payment fraud in Canada and many European countries. While EMV is new to the U.S., payment card fraud is not, with nearly $8.5 billion in fraudulent transactions in the U.S. in 2015 alone. What’s more, the U.S. represents nearly 40 percent of worldwide fraud, despite having less than 25 percent of transaction sales volume.

EMV defined

So what is EMV? EMV technology is based on specifications developed to ensure worldwide acceptance of secure payments by an organization called EMVCo, a group of leading companies in the payments industry including American Express, Discover, JCB, MasterCard, UnionPay, and Visa and supported by dozens of other companies in the industry. EMV has become the global standard for authenticating credit and debit cards using an embedded chip. The chip in the card encrypts the customer's bank information, changing it with each transaction, as opposed to the magnetic strip on traditional cards which contains fixed data. If the data from an EMV transaction is stolen, it is useless as it was only good for one purchase. If the data on a magnetic strip is stolen, it can be used over and over until the theft is reported and the data blocked. (It is important to note that while EMV protects against card present fraud, it alone does not protect against card non-present fraud.)

The liability shift

Under a liability shift imposed by MasterCard, Visa and the other card networks on October 1, 2015, merchants who haven’t upgraded their POS terminals to accept EMV chip card payments can be held liable for certain fraud related chargebacks. This is especially important for small businesses who can be particularly negatively impacted by a fraud incident.

The chip and dip of credit card transactions

When talking about EMV transactions, the phrase “chip and dip” often comes up. This refers to the process used to conduct an EMV chip card transaction. Unlike a traditional credit card that is "swiped" through a payment device, an EMV chip card is "dipped" or inserted into an EMV compliant card reader and remains there until the transaction is complete. This process can take a little longer than the traditional card swipe, but the security benefits and cost savings of preventing potential card fraud are worth the wait. Merchants can use this time to their advantage by providing information about products, upcoming sales and promotions, and building a rapport with customers that can lead to repeat business, referrals, and greater satisfaction with the business.

EMV enabled credit card terminals

Because EMV is just catching on in the U.S., many small businesses are still waiting to upgrade their payment systems to accept chip cards. The good news is the majority of available card readers today are EMV-enabled, so merchants have more options to choose from. Some of these devices also include additional useful features. A reputable POS provider can be a good resource for choosing an EMV-enabled card reader with the best options to fit a business' particular needs and budget.

Something to consider when choosing an EMV enabled device is the ability to accept NFC, or contactless, payments such as those offered by Apple Pay, Android Pay and Samsung Pay. With the popularity of mobile wallets, NFC payments are becoming an increasingly important payment option for small businesses to offer their customers. It's also important to look for security features such as tokenization, which protects data at rest and is useful for tip adjustment and recurring billing, and encryption, which protects data in flight.

Some merchants and consumers ask why chip card card readers make an annoying noise at the end of each transaction. The reason is surprisingly simple — it's a reminder call. Since an EMV transaction requires the card to be left in the reader for a few seconds, the noise helps customers remember their cards.

The benefits of upgrading card readers

So, should a small business like yours upgrade your POS system to accept EMV transactions? While there is no law that mandates EMV adoption, doing so is a mobile wallets and the costs that accompany it, as well as pave the way for accepting contactless payments. Additionally, many of the new card readers that process EMV transactions include helpful features such as the ability to integrate with other business systems including inventory, employee scheduling and payroll, and loyalty and gift card programs, while also providing advanced transaction reports, customer and sales analytics, and more.