Encryption May be Better than EMV for Fraud Protection

Jun 01, 2015

The U.S. is the last major market to embrace the new chip technology. All other major markets have been implementing chip card technology over the past ten years. In fact, if you’ve recently traveled overseas, you might have noticed that your standard American magnetic-strip cards are an inconvenience since Europe, Asia, Canada, Mexico and even Brazil have already moved to the new technology; this obviously makes you much more vulnerable to fraud.

As the credit card companies of the U.S. move to implement these changes, businesses need to be aware of the different technologies that can help prevent fraud. It is recommended that using these technologies in conjunction can help secure the payment infrastructure; thus, preventing card fraud. The three technologies in conjunction are:

  • Chip technology – improves the security of a payment transaction by providing cryptographic card authentication which then helps to protect against acceptance of counterfeit cards.
  • Encryption – immediately encrypts card at inception – card swipe, key entry, tap or insertion – preventing anyone from reading or using the card data for unauthorized transactions.
  • Tokenization – replaces card data with surrogate values (i.e. “tokens”) giving it no value outside of a specific merchant or acceptable channel.

The white paper, developed by The Smart Card Alliance Payments Council, reveals that the degree of layering of these three technologies will differ among payment stakeholders depending on their requirements, environment and budget. It also discusses how payment industry implementation of the three technologies can secure the payment infrastructure.

The U.S. has been moving very slow and reluctantly so far in implementing this new payment infrastructure. Because all other major markets have already implemented it, it has made the U.S. a major target for fraud. For businesses that have been categorized as “high risk”, it makes it even more difficult for them to obtain secure payment processing solutions.

Traditional lending sources refuse to work with businesses that are categorized as “high risk”. The reasons for this categorization can vary. Fortunately, there are providers that specialize in offering business such as this high risk merchant accounts. These accounts offer businesses a safe and efficient solution to their processing needs.

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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 on 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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