Five Steps to Getting Ready for the New “Chip” Style Credit Cards
by Mike Roux, Strategic Payment Systems Credit Card Processing
As you may know, credit cards are now being issued which contain “EMV” chips in addition to the usual magnetic strip. As the transition continues, here are some important points to keep in mind to make sure your museum is ready.
Step 1: Understand how EMV cards prevent fraud.
Also known as smart cards or chip cards, EMV technology was established by Eurocard, MasterCard and Visa (hence “E.M.V.”) in the early 1990s. EMV cards come with an embedded microprocessor that interacts with a merchant’s point-of-sale device (POS) to provide much better security than a magnetic stripe. This is a needed improvement: currently the US accounts for over 50% of all the world’s bank card transactions, but for over 80% of the fraud.
The embedded chip is programmed by the card issuer to transmit a unique secret code with every transaction. This code is transmitted by the merchant’s POS once the amount has been keyed to be authenticated by the issuer. Use of the EMV chip then triggers verification by the cardholder in either the form of a PIN or a signature. This constantly changing secret code makes copying the card almost impossible.
Step 2: Protect your museum from liability.
The US is one of the last industrialized countries to move to EMV technology as a payment standard. October 1, 2015 is the date that the liability shifts for all non-EMV enabled point of sale transactions (except pay at the pump, which is set for 2017). It is expected that by the end of 2015, US banks will have issued over 165 million EMV credit cards and over 105 million EMV debit cards.
Starting October 1, 2015, the party providing the most EMV options will be protected from the financial loss pertaining to counterfeit, lost or stolen ‘card present’ transactions. For example, if the card has an EMV chip, but the museum’s POS can only read magnetic stripes then the liability shifts to the museum. If the museum’s POS can and does read the EMV chip, then the liability stays with the issuing bank. Making sure you are using up-to-date equipment will help protect your museum from being liable in fraudulent situations.
Step 3: Know what the current regulations and requirements are.
At this time there is no law requiring, nor any government entity enforcing merchants to support EMV technology. However, the liability shift, along with increasing the security of your customer’s data should provide added incentive to support EMV. Eventually, the payment card industry may decide to make changes regarding supporting EMV for card present merchants to meet compliance standards, but currently no changes have been announced. Your credit card processing company should keep you informed of any and all changes in a timely fashion.
Step 4: Talk to your credit card processing company about technology & support.
Speak with your credit card company about upgrading your hardware or software to support EMV chip cards. You may need to upgrade your existing terminal or POS system to support this new technology. However, in some cases you may have hardware that has the ability to support EMV chip cards, and all you need to do is download the most recent version of EMV certified software. If you have been putting off upgrading your old credit card processing terminal, this is the ideal time to make that change.
Step 5: Familiarize your staff with the new procedures.
New EMV-enabled systems are easy to learn, as the steps are very similar to traditional magnetic stripe cards. The EMV card is inserted into a slot on the EMV enabled device, instead of a magnetic-strip swipe-through. The terminal then powers the EMV chip in the card, which allows the terminal and the card to verify one another. Once the amount has been entered, the card will generate a unique secret code that will be transmitted by the device along with an electronic token in place of the primary account number. Once the issuer validates this information and sends back an authorization code, the cardholder will be prompted for either a signature or a PIN number and the transaction completes as normal.
This process has been in place in Europe and other industrialized countries for over two decades. The transition to EMV should be fairly simple with the right equipment and software to power the process. Don’t get left behind. Your patrons are counting on you to protect their data and to be part of the security solution.
