Corporation Executives Doubtful of New Credit Card Designed to Combat Fraud

Jun 24, 2015

The frequency and number of cyber attacks in the U.S. has led many to hope that the improvements made in credit card technology will bring about a reduction in credit card fraud. With the deadline for EMV being October 2015, improvements are already being implement. However, there is one big problem.

While the basic technology is already being widely used around the world, it is being introduced in the U.S. with a significant flaw. Banks that are enabling the chip technology have cut corners by only requiring signatures and skipping the requirement of a PIN code. The biggest argument against this is that in previous breaches, like Target and Home Depot, not a single PIN debit card had to be reissued. Signature proved to be worthless.

Mike Cook, assistant treasurer and senior vice president of Wal Mart, stated that cutting corners will only turn the new system into a “joke” since “signature is worthless as a form of authentication”. In the breaches of both Target and Home Depot, the card number was useless to the fraudsters if they did not also have a PIN; this was not the case with cards using signature for authentication.

The big concern now is that fraud will not be eliminated on the scale previously anticipated if signatures are used instead of PINs. The statistics of the use of PIN in Europe reveals how PIN significantly decreased not only stolen card fraud but also counterfeit. So why isn’t the U.S. doing the same?

U.S. retailers are pushing for the chip and signature system due to cost. Adding a PIN system in the U.S. forces bank and payment systems to conduct additional data processing. This in turn requires expensive system upgrades.  Even with massive data losses, these losses are still small compared to their annual sales; thus, they have little incentive to improve their security.

For merchants, it can be difficult to satisfy security needs while also keeping consumers’ wishes in mind. Many executives are concerned that if they make their cards less convenient, their customers will walk away and obtain cards from other banks. Retailors are concerned that inconvenience will lead to less spending, which leads to a decrease in sales revenue.

Many merchants have turned to high risk credit card processing as a solution. If a business experiences a large number of chargebacks, for example, traditional lending sources will most likely refuse to offer their services and turn the business away. Thankfully, alternative lending sources like eMerchantBroker specialize in offering high risk credit card processing. You can also secure chargeback shield that will protect you from potential fraud. Regardless of what happens in the future, you can secure your business and therefore your customers’ loyalty now.

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Having a merchant account allows an account holder to take advantage of merchant cash advances. When a merchant is approved for an advance, the business agrees to receive a lump sum of cash in exchange for an agreed-upon percentage of future credit card sales.

Pricing varies depending the merchant’s industry, past credit card processing history, the type of business seeking the account, average ticket sales, and average transaction volumes.

Yes, EMB works with merchants who are building their credit, as well as those who have poor credit. EMB also approves merchants that have no credit card processing history and businesses that have lost their merchant accounts due to high chargebacks.

Several factors influence a merchant’s risk level. Though only one factor likely will not get a merchant classified as high risk, a combination of these may: business size, location, and industry, credit score, credit card processing history, a industry’s reputation for excessive chargebacks, a prior history of high chargeback ratios, and whether a merchant exclusively sells online.

Virtual terminals are stationed on a merchant’s website, making it easy for customers to make a payment or purchase online. Merchants or a payment processor can easily set up virtual terminals, so online businesses can accept credit and debit card and e-check transactions.

A merchant account is a business account with an acquiring bank. Without this business account, which actually works more like a line of credit, a merchant cannot accept and process credit and debit card transactions. Businesses need a merchant account to accept major credit cards via a static point-of-sale terminal, mobile card reader, or through a virtual payment gateway.

After filling out EMB’s simple online application and submitting any necessary, requested documents, many merchants get approved within 24 and 48 hours.

EMB specializes in working with high-risk merchants. EMB works with many merchants, including but not limited to businesses in these industries: gambling and gaming, adult entertainment, nutraceuticals, vaping and e-cigarettes, electronics, tech support, travel, high-end furniture, weight loss programs, calling cards, e-books and software, and telecommunications.

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