What is EMV?
EMV stands for Europay, Mastercard and Visa.
It is a global plan to reduce credit card fraud in multiple ways by taking advantage of chip-card transactions:
- EMV cards make the technology required to forge a fraudulent credit card much more expensive and out of the reach of potential criminals.
- EMV transactions use unique codes for each transaction — so even if the data your card provides to a reader is stolen, that data cannot be used to make a purchase with your card.
- Over time, the U.S. will completely transition to chip-and-PIN transactions, which add another layer of security to the transaction.
How Did We Get Here?
The decision to transition from MSR (Magnetic Stripe Reader) to EMV transactions in the United States was made after its remarkable success in Europe. In some parts of Europe, up to 95% of credit card terminals are chip-enabled.
The United States has the second highest rate of credit card fraud (42%), behind Mexico, according to this study. If we recognize that European countries such as Germany and Sweden have managed to get their credit card fraud rates as low as 13% and 12%, respectively, through the use of chip-card transactions, then it is quite apparent that something has to be done.
If you are a consumer, and you use a credit card, you may have already had experience with EMV transactions. Many nationwide chains such as Target and Walmart have already placed EMV-compliant terminals in almost every store. If you have a credit card with a chip in it, and you try to swipe it, it will be denied, and you will be instead instructed to place your card in the contact reader.
The implications for retail business owners are far more extensive, and began about a month ago. On October 1st, 2015, a liability shift occurred, which is essentially an agreement between bankers and credit card companies to put the burden of covering the cost of fraudulent activity on whichever party is the least EMV-compliant. If the bank that issues a credit card does not use chips, and that card is then used illegally, then the bank will have to pay. But with chip-cards on the rise, that liability will begin to fall more and more on companies that have not yet made the investment to switch to EMV-compliant terminals.
The United States is more than a little late to the EMV party. The European divisions of Mastercard and Visa had their liability shift about 10 years ago, which is one of the main reasons the technology is so widespread in that area. But it’s not just Europe. All Latin American countries experienced their liability shift at the same time as Europe, and just a few years after, the liability shift had occurred in regions such as the Middle East, Africa, and South America. With the addition of the U.S., EMV cards everywhere will become even more secure as the world’s largest user of credit cards is finally ready to make the next step in payment transaction.
The whole idea of a liability shift can seem quite intimidating, especially to small business owners. You can read more about the liability shift in another blog titled ‘EMV Liability Shift’ here.
Good news: Our tech-experts are here to help. If you have any questions on the requirements of EMV-compliance, or you think you are ready to make the switch for your business, then please do not hesitate to call us or send us an email.
RAD DeRose is the President & CEO of L-Tron Corporation. He has over 30 years experience in industrial automation and data collection solutions and brings a deep industry knowledge-base on the challenges faced in the commercial and public safety sectors. RAD can be reached at 800-830-9523 ext 114; RAD.DeRose@L-Tron.com