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.