Different industrial sectors are facing positive changes and experiencing improvements in efficiency and effectiveness all because of technological innovations. Technology has generally changed our way of life, the way we do things and achieve results. The finance sector is no exception, it is undergoing continuous changes with time. The one advancement that is increasingly gaining popularity is the use of EMV technology on credit cards. For your business to keep up and stay current, you need to advance your payment options and accommodate online payment solutions.
What is EMV Technology?
EMV is an abbreviation for Euro pay, MasterCard, and Visa, its parent companies. It is a security measure for account information storage in credit cards. EMV is an advancement meant to take up the role of the magnetic stripe that has initially been in use.
Compared to magnetic stripe, EMV is more secure as it provides better protection against most forms of credit card fraud. There are two main types of EMV credit card technology:
- Chip and Signature
- Chip and PIN
As the name suggests, just as in conventional credit cards, the signature function necessitates a signature to verify transactions. The PIN function, on the other hand, acts like a debit card, it requires a four-digit PIN to verify the transaction.
The PIN verification function is more secure than the signature one. The fact is, anyone, ca forge a signature and in most cases, no one checks to see if it matches that of your card. As with PIN, it is not easy to duplicate.
How do EMV Chip Cards Work?
Many stores nowadays ask customers to pay via chip cards. The use of chip cards is an alternative for magnetic cards that were quite vulnerable to fraud. Chip cards have a superior security feature and create a unique impression each time it is used.
With EMV chip cards, a customer inserts their card into a reader instead of swiping until the transaction is complete.
During the transaction process, the terminal or reader needs to verify the actual person using the card. This can be done with a signature or PIN depending on your location. The chip and the terminal then create a unique, encrypted code often known as a token. The fact that the token is unique, means it can only be used one at a time.
The token or cryptogram is unique to every transaction, meaning there is no use for one to copy unlike in the magnetic stripe.
After the token has been generated, it has to be decoded and verified that it came from your card’s chip. Verification can either be:
- Online verification- the token is sent to the card issuer over the internet
- Offline verification – is done within the terminal, this is a fast verification method.
- The purchase is approved once the system determines that you have sufficient funds on your card.
Cards with both Chip-and -Signature and Chip-and-PIN
A credit card can carry both verification modes capability. The features of the credit card are determined by the card issuer. A card with both functionalities is however set to prefer one of the verification modes.
Some cards also still hold the magnetic stripe for different reasons. The fact is, the transition from magnetic stripes to EMV is not in unison. Some businesses would still prefer using magnetic strips to suit their financial and business needs.
Advantages of EMV Chip Cards
- Security against in-person fraud- the transaction process includes data authentication and cryptographic technology that provides a top-notch security feature against counterfeit purchases or in-person frauds.
- Authenticity- EMV chip cards have a unique digital seal that proves their authenticity anytime it is presented. It is therefore easy to identify with the appropriate owner.
- Information storage- compared to magnetic stripe cards, EMV chip cards do store a relatively good amount of information.
- Improved security for online payments- EMV technology allows merchants to provide secure online payment options for their clients.
Should You Dip or Swipe your Card?
Dip your credit card, EMV technology prefers dipping for it is more secure. In case the terminal doesn’t accept chip cards, you’ll be provided with an alternative to swipe.
Some customers have raised concerns about the amount of time the process takes as compared to swiping. The processing time however should not be longer unless in a case of technicalities and internet shut down.
EMV and Card Security
EMV chip technology is considered more secure than conventional magnetic stripes. It however doesn’t mean it doesn’t have vulnerabilities. Just like any other online payment system, it faces risks concerning cyber-security. As data security experts are upgrading and making systems more secure, hackers are working to identify and maximize their vulnerabilities.
There is still a chance that a chip card can be intercepted. Chips cards have measures in place to counter fraud: Making fraudulent transactions difficult- the EMV chip is only applicable for a card-present transaction where you have to insert the chip. The token that is generated in this process is unique and can only identify with your transaction.
Making card duplication difficult- EMV chip cards cannot be duplicated easily as in the case of the magnetic stripe. The chip can be described as a complex microprocessor. It can’t be scanned, copied, or replicated easily.
EMV cards are susceptible to security risks. The magnetic stripe in it can easily be read with a skimmer and duplicates made. Scammers often use the available data to develop a magnetic strip version of your card. EMV card doesn’t completely counter fraud, it however makes in-person fraud and counterfeit card development difficult.
Merchants are required to process credit card payments with hardware and software that supports EMV chip cards. Merchants need to consider this especially with the presence of liability shift.
The liability shift simply means that merchants who fail to update their equipment to support EMV chips are liable for any fraudulent activities and charges that using EMV chip card reader could have prevented.
How to set up a merchant account
The process depends on your current payment process. For a merchant with an integrated point of sale (POS) system with inbuilt payment processing, an update of the equipment is needed. The integrated setup, both hardware, and software should be EMV compliant. In the case that your POS and credit card terminal are not integrated, you only need to procure an EMV card reader.
When making such critical decisions concerning your payment systems, you need to consider the fact that contactless payment options are taking center stage. With time, the popularity of digital wallets is rising as people are continuously considering such options.
The other option to help you upgrade is the use of mobile chip card readers. This is the ultimate option for a merchant working within a budget.
How Much Does EMV Cost?
Your transaction costs don’t change with this shift. As a merchant, you should only be considering your initial investment used to procure the hardware. Upgrading however comes with its share of benefits that makes the investment worth it. Take for instance the fact that the shift to EMV eradicates fraud liability and the expense of fraudulent charges.
Equipment that accepts it
Here are some of the credit card payment options that are compatible with EMV chip cards:
- Verifone engage
This is an EMV compliant terminal that is quite easy to use. Here, customers can swipe, dip or tap to make purchases. With this tool, it is easy to track all your payments since the purchase amount and customer details are tied together. Some models are in-built with receipt printers making them more versatile.
You can also provide a personalized experience to your customer since the tool can easily be integrated with your systems.
- Mobile card readers
This is a favorable option for merchants working with a budget or who want to upgrade slowly. Many mobile payment providers do offer EMV-enabled processors at a relatively cheap cost. Mobile payments are easy to make and are quick.
There are many mobile card reader solutions in the market today that you can upgrade with. For example, the Chipper BT accepts magnetic stripe and EMV cards via Bluetooth. Accepting payments from your phone is therefore seamless.
Considerations when choosing a credit card processor
- Cost- it is essential that you consider the upfront costs of the processor, as well as compulsory fees, paid overtime.
- Payment methods compatibility- credit card processors are developed differently. You should purchase one that is compatible with all payment methods. When upgrading to EMV chip cards, for instance, your processor should be able to accommodate the same.
- Customer support-ensure that you are procuring a system that offers good and round-the-clock customer services.
- Security features- a good credit card processor comes with effective security features. It should have a good level of fraud protection and cybersecurity features.
- Integration- your processor should be able to integrate with your systems for ease of use. For instance, you should be able to link it with your point of sale system and match it to suit your business needs.
If a business hasn’t upgraded to EMV technology, it time to make a shift. The shift could be quite expensive but not compared to the costs merchants risk to pay relating to future credit card losses. EMV is already shaping the current and future payment processing systems all over the world. It is thus safe for a merchant to take the shift and embrace the positive advancement.