This is how credit card issuers have been feeling ever since the hacking by overseas crooks was discovered. Mind you, this was not an over-night instance of fraud. Crooks had patience and planned for years. They are not stupid. They knew where weaknesses were – and still are –in some industries. And there is still the common everyday crook that is still inserting skimmers into ATM’s.
But the card issuers have been just as busy working on ways and means to keep consumers and companies safe from hackers. Named after the original developers, Europay, MasterCard® and Visa®, the EMV chip works differently than the magnetic stripes on the back of credit and debit cards. The ‘old-fashioned’ mag stripes contain all of a consumer’s personal information. This is what the hackers steal at the point of sale.
The EMV Chip (aka “chip and PIN” or “chip and signature”) stores information on a microchip imbedded in the card itself. Developers say it is virtually hack-proof. In has been used in France since 1992 and will soon be available in the U.S. Use of the EMV Chip will chop into the fraudulent use of credit cards and therefore make a big dent in chargebacks. This alone should make merchants ecstatic.
But there is also another benefit of which many merchants may not be aware. Both Visa and MasterCard perform CPI audits to ensure that merchants are using all requested methods to remain CPI compliant. If a merchant is found in non-compliance, the penalty fees can be staggering. The card associations’ number one objective is to keep their card members information secure. Both associations have announced that within a certain deadline, if 75% of a processor’s clients have switched over to accepting the EMV Chip, those merchants would not be audited.
So what does it take from a merchant standpoint to be able to accept a card with an EMV Chip? The good news is that some of the most recently released terminals are already set up to accept them. The merchant will not have to change terminals – he will just have to educate his employees on the change. The major difference is when making the sale, the card is not swiped. It is inserted into the terminal where it remains until the sale is complete. Easy!
If you are a high risk merchant the new security measures of the EMV Chip will help your chargeback ratio. It is in your best interest to ask your high risk merchant account specialist about any and all procedures you may need to take to be able to accept the new chipped cards.