EMV Chip Cards: The Good, The Bad, The Ugly
Over half of the world’s credit card fraud happens right here in the U.S. In response, debit and credit cards with an EMV chip has been heavily pushed by the U.S. government, and readily adopted by merchants.
Europay, Mastercard, and Visa, the three largest credit card issuers in the world, developed a super small computer in the form of a metallic chip embedded in debit and credit cards. This technology is called EMV, and it is now the international standard of card transactions and among the most formidable developments in the hospitality industry.
Instead of swiping magnetic stripes, the newest iteration of debit and credit cards involves dipping EMV chip cards into a payment terminal, often right at the guests’ table.
The magnetic stripes on older generations of credit and debit cards hold static, i.e., unchanging, data. That means that a thief can steal a card, copy the personal information contained in the magnetic stripe, and have the sensitive data and cardholder information needed to make purchases. In essence, the counterfeiter can produce the data over and over again.
On the other hand, the EMV chip card comprises technology that authenticates individual chip card transactions. EMV chip cards create a unique with every purchase that can never be used again. Additionally, the EMV chip card never has to leave the guest’s hands – casting yet another level of security for both merchants and guests alike.
EMV chip card technology has been in use in Europe and Canada for over a decade now, and its effects in reducing card fraud are indisputable. Here in the U.S., EMV chip cards have been shown to have drastically reduced card fraud since its early adoption in 2015. In fact, Visa reports a 58% drop in counterfeit fraud in March of 2017 as compared to a year earlier within EMV compliant merchants.
As with all new changes, there are challenges and an adjustment period. The adoption of EMV chips means merchants must take additional measures. The added expense of changing registers, self-checkout terminals, vending machines, etc. can be daunting.
Guests will also now have to adapt to a new payment process. Payment using EMV chip cards takes longer because guests will no longer swiftly swipe their credit cards through a machine. Instead, they will insert their EMV chip card into a payment processor and either enter a PIN or sign the receipt just as they have been accustomed. Guests will find that their checkout experience takes a few more seconds than they are used to.
As the U.S. continues to embrace the EMV chip card, however, the technology will improve and mature. So far, over 2.3 million merchant locations have adopted EMV chip card processing technology by June of 2017; this number is continuing to climb sharply.
While there are no laws compelling restaurants and merchants to be EMV compliant, restaurants who do not upgrade will likely be affected by the shifts in EMV liability laws.
Before Oct. 1, 2015, if a restaurant server ran a fraudulent card, the banks absorbed the costs. Since Oct 1, 2015, shifts in debit and credit card liability laws issued by Mastercard, Visa, Discover, and American Express dictate that the least EMV compliant party (merchant, bank/card issuer) will be held responsible for the cost of the fraud. This new EMV mandate means that if you, the merchant, do not employ EMV chip card reader technology, it is you that will be held liable for the fraudulent transaction.
Small and large American financial institutions have been speedily issuing the EMV chip cards to comply with EMV mandates. Currently, there is an EMV compliancy race between financial institutions and merchants.
So far, the banks are winning: 85% of credit cards issued by banks are now EMV compliant, as opposed to 50% of merchants that have adopted EMV chip card technology as of June 2017.
If liability shifts and EMV compliance issues are making you nervous, rest assured that SecureTablePay has got you covered. SecureTablePay is EMV compliant so that you can avoid costs from chargebacks and other security-related penalties.
SecureTablePay works with more than 20 restaurant management systems. (If you use a system that hasn’t been integrated yet, we’ll work with you to integrate it quickly and with minimal effort.) And it works with most leading payment processors, ensuring secure and accurate transaction processing.
SecureTablePay delivers not just increased security but increased efficiency as well: the perfect combination. When you eliminate steps by completing the payment transaction directly at the table, you reduce time, cost and risk. And that means greater convenience for guests and greater productivity for servers.
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