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EMV (Chip) Credit Card Processing: What You Need To Know About EMV Chip Technology

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EMV (Europay, MasterCard, and Visa) is a global standard for payment cards that equips them with computer chips to provide better protection against fraudulent transactions. You have probably heard of EMV referred to as chip technology, or even been prompted to "insert chip or swipe" at the register. Banks in Europe have been issuing chip cards for years, and the United States implemented the same technology a few years later.

What Is EMV?

EMV technology reduces fraud to protect cardholders, issuers, and merchants against the use of counterfeit, lost, or stolen cards. Chip cards are embedded with a microprocessor that interacts with a point-of-sale (POS) device and is used in combination with a PIN or signature to ensure the payment card is valid and belongs to the user. The technology increases security, with the chips being essentially impossible to replicate.

Is EMV More Secure?

Simply put, yes, EMV chip-enabled cards offer more security. A magnetic strip, the previous standard for credit and debit cards, has all of the information about the card within the strip. With everything on the card communicated to the POS device, people looking to hack into retailer databases typically have everything needed to use your card for purchases.

The EMV chip is a tiny computer chip that generates a unique, single-use code for each transaction. A transaction cannot take place without the code, which is nearly impossible to duplicate. Your card still works essentially the same way (you need to enter your PIN or sign if necessary), you just insert your card instead of swiping it and get some extra security.

EMV Debit Cards

EMV debit cards are incredibly simple to use; all you have to do is insert the card and follow the prompts until you are told to remove your card. Depending on your financial institution and the merchant you use, you may be required to enter a PIN number or sign for the transaction. It is important that you remember to insert the card instead of swiping, as swiping does not provide the same security as the chip. In fact, most chip readers will not allow you to swipe a card with an EMV chip.

Though the technology is simple and more secure, not everyone has the proper technology to read EMV chips. Some may have the proper readers, but they simply aren't active yet. In this scenario, you simply swipe as if you were using a non-chip card. In any case, while EMV cards are safer, you should still keep an eye on your card statements and be sure to keep the card physically secure to avoid someone stealing your information.

Benefits of EMV Cards

There are multiple benefits that come from adopting EMV technology in your business, some of which include:

  • Data protection: EMV chips are far more secure than a magnetic strip. Giving your customers the option to use a safer method of payment makes them feel safe and valued. Not only does this keep the information of your customer base safe, it ensures they keep returning to your business.
  • Discourage theft: Thieves looking to steal payment information are often discouraged by EMV technology. The chip makes it significantly more difficult for thieves, which makes it less likely that your business will be a target.
  • Fraud protection: It is understandable for businesses to worry about accepting counterfeit or stolen card payments, but EMV chip technology offers protection. EMV chip readers verify that the card is valid, granting you the peace of mind of knowing the card is not a counterfeit.

How Much Does EMV Chip Technology Cost?

It is difficult to provide an exact cost for EMV chip technology, as your POS system and the type and number of readers you use impact price. The following pricing guide includes industry averages for EMV chip technology.

  • A ready to use, EMV-enabled terminal has an average cost between $500 and $1,000.
  • Upgrading a mobile device has an average cost of around $50 for both Android and iOS devices.

It is important to note that costs increase if you use an integrated POS terminal, with costs largely dependent on the complexity of the system you are using.

Liability for Non-Compliance

It used to be that the card issuer typically covered the cost of fraudulent purchases. However, in October of 2015 the liability for these purchases shifted to the weakest link of the payment process: the merchant. If you have not upgraded to EMV-enabled equipment and systems, you are liable for the costs of fraudulent card use in your business. Although compliance with EMV is voluntary, liability is not. This makes it crucial for you to carefully consider upgrading your equipment. Upfront costs may be daunting, but it is nothing compared to the fees your business might have to pay in the event of fraud.

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