EMV Soon to be Required for Credit Cards

Is Your Business Ready?

EMV Soon to be Required for Credit Cards
August 27, 2015

What does EMV stand for? It is short for EuroPay, Mastercard, and VISA, the three companies that combined to develop the new standard for chip-based credit cards. EMV represents the next step to prevent credit card fraud through point-of-sale transactions.

EMV cards contain a computer chip embedded within the card itself that generates a unique set of information for each transaction, as opposed to the old magnetic stripe technology that contains all of your payment information. The cards are very difficult to duplicate, discouraging that method of fraud.

The U.S. has lagged behind in the adoption of EMV technology for credit card security, but time is finally running out for many point-of-sale (POS) merchants. Starting in October 2015, the Payment Networks Liability Shift changes the rules on liability for fraudulent POS transactions. After that date, liability lies with the party that has taken the lowest level of precaution (in other words, not supporting EMV).

If a customer uses a traditional magnetic swipe card, the same rules still apply. The bank or financial institution that issued the card is liable for fraudulent purchases because they have not taken the initial step to upgrade. The issuer is also liable if both parties have EMV technology and a chip-based card is used at a chip-enabled terminal.

However, if a chip-based card is swiped through a magnetic-stripe only reader, then the merchant is liable for the fraudulent transaction. Since the card issuer adopted the new protective measures but the merchant did not, the merchant is assumed to be the negligent party.

ATMs and automated gas pumps have an extra year to make the transition before liability shifts. The liability is still limited to POS transactions, so transactions where the card is not present and keyed in separately (phone or Internet orders) are not affected.

As a merchant, what do you need to do to be ready for the change? Do you even have to switch to an EMV reader at all?

You can opt not to make the transition right away, since chip-based cards will continue to have a magnetic strip and EMV readers will continue to be capable of swiping traditional magnetic cards for the foreseeable future. There are no fines or penalties for not complying. However, you now have a new source of liability, and crooks are likely to consider you an easier target.

Assuming you decide to switch, you have many choices. Your current payment processor likely has their own preferred reader, but now is the perfect opportunity to shop for payment processor and equipment options. It is somewhat analogous to switching cellphone service providers. If your payment processor has not contacted you yet, be proactive and ask about their reader options and costs. Be sure to include any software changes and training that are needed to make the system functional.

Most EMV card readers are also capable of the near-field communications (NFC) technology that is necessary for newer mobile payment systems. If you are changing your system, you probably want to have mobile payment capability as well — but run a cost-benefit decision after you shop around for alternatives. If you are a small merchant, you realistically may not be able to afford a top-grade EMV terminal.

Assess your customer base and your options for payment processors and readers, and do a cost-benefit analysis to decide which system is right for you — but get started right away. Otherwise, you may be making a last-minute decision with limited information. Give yourself time to shop around and make an informed decision.

If you want more credit, check out MoneyTips' list of credit card offers.

Photo ©iStock.com/iamporpla

  Conversation   |   30 Comments

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Erin | 08.27.15 @ 16:04
We just had one of our cards replaced with one with a chip. The added security is a nice bonus, and I hope that businesses are able to adapt quickly to the change.
Elaine | 08.27.15 @ 16:06
Yikes, I don't like the way this is headed...one world order.
Beverly | 08.27.15 @ 16:11
I don't understand how the chip makes the card safer, other than not being able to duplicate the card. It doesn't stop online fraud.
irene | 08.27.15 @ 16:12
I don't even remember the last time I swiped my card through any machine. My credit card purchases are made online and I only use cash when shopping in actual physical stores
Daniel | 08.27.15 @ 16:13
One technology leap needed because fraudsters and thieves beat the last, it is an ongoing battle
Zanna | 08.27.15 @ 16:15
This has been standard in Europe for many years, I don't know why it's taken us so long to adopt it, it's more secure for businesses and customers!
Chrisitna | 08.27.15 @ 16:20
I've had my credit card number stolen from a gas pump and used in a different state before, so personally, I love the added security of a chip.
Andrea | 08.27.15 @ 16:21
Added security is great idea, but not quite sure this is a good way.
gracie | 08.27.15 @ 16:23
I think any extra security is a great feature to have on our credit and banking cards!
trish | 08.27.15 @ 16:31
I am all for finding ways to protect both the consumer and the merchant.. I only fear that once a hacker figures out how to bypass this, we could end up with deeper identity theft. I am hopeful they are crossing all the t's and dotting all the i's before pushing through with this.
Sarah | 08.27.15 @ 16:40
I am on the fence. I see the sad need for more protection but am not entirely sure that a chip is the key. It might be just the thing though.
Sara | 08.27.15 @ 16:41
I do not like this idea. However, sadly not sure there is much I can do about it.
Britt | 08.27.15 @ 16:54
I just recently got a new card that has a chip. I really like the added security.
Steffanie | 08.27.15 @ 16:58
I am in agreeance with Elaine on his one.
Crystal | 08.27.15 @ 17:02
I think the added chip is great. I think everyone should be using this to prevent fraudulent activity.
Alec | 08.27.15 @ 17:14
My husband and I were actually talking about this last week when we noticed our regular grocery store upgraded their card readers to include credit cards with chips. I wasn't sure what the chips did. Now I know. And now I want to contact our bank to see why they haven't contacted us about upgrading our cards to include these.
Jackie | 08.27.15 @ 17:16
I'm hoping the security is as good as it has been described. I have two cards that have the chip although most of my card usage is online.
Crystal | 08.27.15 @ 17:17
This is news to me! I guess if it creates another layer of security it can't be all that bad, right? Thanks for the information!
Debbie | 08.27.15 @ 17:30
I don't use credit cards, only debit
Kamie | 08.27.15 @ 17:41
The chip may be seen as a pain for people, but it is needed. People are taking identities, and thinking they are entitled to others' belongings. If people would just keep their hands to themselves and return things that are not theirs, then we would not need to go so far with this technology to protect what is ours.
Heather | 08.27.15 @ 17:46
I cannot wait for this to go live. It should decrease the amount of theft associated with using someone else's card.
Christina | 08.27.15 @ 17:46
More security on anything with money is a plus..
Bobbie | 08.27.15 @ 18:39
Now we just need to require a PIN like they do in Europe for all credit card transactions. So much more security that way.
Donnie | 08.27.15 @ 19:04
Finally companies making a change instead of charging for hidden charges and later payments
Nancy | 08.27.15 @ 19:07
I've seen a lot of places that are accepting the chip cards. If it stops the fraud I'm all for the changes.
Victor | 08.27.15 @ 19:44
Its great that they actually do something to protect the consumer
Wanda Langley | 08.27.15 @ 19:57
My Visa card has been hit for $300 at a gas pump that I used. The stolen money showed that I used my card in a different Country. My bank refunded my money but the hassle of signing papers and waiting on my new card took time. I actually don't think anything can stop hackers.
Rychana | 08.27.15 @ 20:31
I'm glad they are finally taking steps to make cards safer since there is so much fraud out there.
Angie | 08.27.15 @ 21:18
I only recently became aware of this - when I got my new debit card in the mail to replace the old one. Wonder how long it will be before thieves figure out how to get around it?
Apryl | 08.27.15 @ 21:47
This is absolutely fantastic!
$commenter.renderDisplayableName() | 03.06.21 @ 11:42