In a way, using the new EMV (Europay, Mastercard, Visa) “chip” card terminals is a lot like having insurance. If you never run into trouble, you may not even realize you have it. Insurance only really pays for itself when you get into trouble. But when you do, you’re sure glad you have it. And it’s the same for using EMV-enabled terminals for card-present transactions.
According to an article on the US News and World Report website, “Embedded in every EMV card is a computer chip that creates a one-time code for each transaction. If someone tries to steal this code, it is worthless because it is valid for a single use. By comparison, magnetic strip cards store all key data, such as a cardholder’s name, credit card number and CVV code, on the strip, and once the information is written there, it never changes.”
The EMV compliance “rules” went into effect in October of 2015, although gas stations had until October 2018 to comply. The word rule is used here because the truth is there’s no law requiring any merchant to use an EMV terminal at the point-of-sale.
Adoption of EMV technology in the US is completely optional. Neither banks nor merchants are under any obligation to use EMV cards and terminals. No one will shut you down, or even send you a reminder, if you fail to implement an EMV terminal. However, there is a strong incentive to use one.
Credit card fraud is a multi-billion dollar problem, with almost half of it occurring in the US. When it comes to reducing credit card fraud though, EMV technology really helps. A new identity fraud study by Javelin Strategy shows “the recent shift to EMV (embedded chip) cards is helping to contain existing card fraud. According to the study, existing card fraud losses declined from $8.1 billion in 2017 to $6.4 billion last year.”
Here’s how merchants are incentivized to adopt EMV technology. Before EMV technology, when there was a fraudulent charge, the banks were typically held liable. And the same holds true today for transactions in which both the card and terminal are EMV-enabled. The problem occurs with asymmetrical transactions.
An asymmetrical transaction is one in which either the card or the terminal are EMV-compliant, but not both. In such circumstances, should a fraudulent transaction occur, the party not using EMV technology is held liable for the charges. In other words, if you don’t use an EMV terminal, any fraudulent transaction using an EMV card on your machine is your headache. And the only way to make sure you never suffer from this headache is to start using an EVM-enabled terminal. It’s like a wonderful insurance policy you hope you never need.
According to Lead Genius, “It doesn’t matter if your customers aren’t using EMV-enabled cards; not everyone has one yet. As long as you are EMV compliant, you won’t be liable for fraudulent swiped transactions whether they come from chip transactions or swipe transactions.”
You’d think this is the type of insurance every retailer would want, but so far, that hasn’t happened. According to Digital Transactions, “[Only] 53.5% of general-purpose U.S. card-present transactions in 2018 were so-called chip-on-chip, meaning both the point-of-sale terminal and the card were EMV-enabled.”
The good news, according to Visa, is that “EMV chips cards continue to gain share and cut counterfeit fraud.” EMV technology is doing what’s it’s supposed to do, it’s just that not every retailer is onboard yet.
The slow adoption is hard to understand. Not only does EMV technology provide very inexpensive risk management for retailers, but the technology also produces a better end-user experience when taking advantage of contactless credit cards, which use the same technology as EMV chip cards. According to Bankrate, “A contactless transaction typically takes between one and two seconds to complete, while traditional cards can take around 10 seconds to process. The consumers benefit by having a faster way of completing a transaction, and it’s more convenient than waiting for 8 or 10 seconds while the transaction gets approved.”
If you haven’t implemented EMV terminals at your retail location, you’re vulnerable to unwanted fraudulent charges. This is especially true for small and mid-sized business who are more likely to be targeted for that very reason.
Do yourself and your customers a favor and upgrade to one of AppStar Financials’ EMV-compliant point-of-sale terminals with NFC (i.e., contactless) technology. AppStar Financial, which has been around since 2002, offers reliable equipment with the latest technology and software, along with the best customer service in the industry. Give us a call.