What is EMV?
Europay, MasterCard, Visa, or in other words, EMV, is currently the most secure way to run transactions from a plastic credit card or debit card. This technology uses a computer chip on your card to authenticate the transaction.
Of course, that is just the beginning. There are probably a bunch of questions you have, so to help we have compiled a list of all the answers below.
Introduction to EMV Chip Card Technology
On October 1st, 2015, a liability shift happened in concurrence with chip card technology. Before this switch, banks across the country printed hundreds of millions of chip cards and sent them to their customers. Many countries around the world adopted EMV long before the United States, and as a result, the US was playing a bit of catchup. This step to make card transactions more secure was important because the US, though only processing 25% of the world’s transactions, incurs 50% of the fraud.
As of September 2016, 78% of credit/debit cards contain EMV chips, while 30% of businesses who accept credit card payments are able to take chip cards.
How is EMV more secure?
With traditional magnetic stripe debit/credit cards, every time you swipe your card the same number is used to access and move money, but with the chip every time you purchase something, a secret one time only transaction code is created, enabling the chip card and the EMV card reader to speak to each other.
In the past, your card number could be copied by someone looking to fraud you. If they stole your card information, they could use it many times because the number never changes. But with EMV the number is never the same, making it drastically more difficult to hack your credit/debit card information.
What is the EMV liability shift?
On October 1st, 2015, if a business is unable to accept an EMV enabled chip card and a customer is forced to use their magnetic stripe on the back of the card, the business is 100% liable for any fraud dispute. The business with automatically lose the dispute and be liable to refund the customer, regardless of if it was really fraud or not. It should be noted that while the liability is the same across all industries and business types, the risk is not.
What industries are most susceptible to EMV chargebacks?
There is not a magical portal to peer into and see who is going to claim EMV fraud against you. If you cannot accept EMV, anyone with an chip enabled card that runs a transaction with you will be able to dispute and automatically win the claim. We would never tell you how to run your business. The decision to upgrade to EMV capable technology is entirely up to you. We will help educate you in whatever way we can, but forcing EMV or monetarily penalizing you for not accepting it is something we will never do.
When it comes to the decision to accept the chip card, there are a lot of factors to consider. Do you know all your customers? Are you a doctor or dentist who knows who they work with and have a relationship with their clients? If so, you might decide you have a lower risk to receive EMV related chargebacks, than say a retail store that doesn’t know their customers on a personal level.
At Gravity we do not have terminal leases. So if you’re renting a terminal from us that does not take chip cards and want to upgrade, we can help you. If you own your own terminal and want to upgrade, we can help with that too. Let us know if you want to accept EMV or learn more.
How to pay with EMV chip card technology:
When purchasing something with your EMV card, you will dip or insert the card, chip first, into the chip enabled terminal instead of swiping it. Leave the EMV credit/debit card inside the terminal until the screen prompts you to remove it.
Are all credit/debit card with chips EMV-compliant?
Most cards with chips are EMV-compliant, but it is not 100%. If you are concerned whether your credit/debit cards are compliant, we suggest contacting the issuing bank and inquiring with them.
What will upgrading to EMV cost my business?
There is no simple answer because every business is unique. If you own a food truck, your needs are drastically different than someone who sells cars or Persian rugs. Prices range through the wide array of technology and needs Gravity Payments can meet. We have the ability to help you accept chip cards on the go through mobile payments, or integrated inside large point of sale systems, even simple countertop terminals.
Is EMV the law?
Nope. There is no law in the United States that requires businesses to be EMV compliant according to the liability shift. The decision is yours as the owner of your business. We are here to support your business in whatever decision you make. We are always in your corner. The change is purely on who is liable for EMV related chargebacks, which can 100% be the business. that accepted the payment. Some credit card processing companies will charge monthly when your business is out of compliance and then charge something else when you are in compliance. At Gravity Payments, we do not charge you additional fees for being EMV compliant or fees for not being compliant.
Why does EMV take longer than swiping?
It takes longer for EMV transactions to run because of the additional security. As the computer chips are working to create the unique codes and tokens to add security to the transactions, a few extra seconds transpire.
The added time will probably lead to an increase in NFC payments like Apple Pay or Samsung Pay. This is because, like EMV chip cards, NFC payments also create unique tokens and codes keeping the information supremely secure.
How old is EMV technology?
You might have noticed that the first word of EMV is Europay. That might lead you to realize this technology was not created in the United States. EMV has been the standard payment type for most major markets, with the exception of the U.S., for decades. If you’ve ever travelled to Canada or Europe you will realize they can accept the magnetic swiper, but everyone is dipping cards.
OK, so EMV is about security and reducing fraud. Has EMV reduced fraud?
Since EMV is only a year old in the U.S. we cannot look at it as a factor. But when we look into Europe, who has been using the technology for a long time, we see great results. Nearly 90% of credit card terminals in Europe are chip enabled-in the U.S. we are at 30% today and projected to be 50% by Jan of 2017. In the United Kingdom alone there has been an almost 70% decrease in fraudulent credit card transactions, according to Barclays. Our neighbors to the north in Canada have seen a drop in counterfeit, lost, and stolen cards from $245 million in 2008 to $112 million in 2013.
How do I accept EMV at my business?
In order to accept chip cards for your business, you will need a terminal or reader that accepts chip enabled credit/debit cards. These readers usually accept NFC (Apple Pay, Samsung Pay) as well as the magnetic stripe reader. Gravity Payments offers a fast array of terminals to fit all your needs. Let us know if you want to chat about upgrading or processing cards in general.
Are NFC and EMV the same thing?
No. They are different but offer a lot of the same features. They are more secure, and they both use unique codes or tokens to secure the payments. EMV and NFC are entirely different types of technology.
NFC stands for “near field communication” and allows devices smart phones, watches, other wearable tech to communicate with an NFC reader when they are close by each other. EMV is a physical chip that communicates to the reader it is physically connected to. NFC is wireless, cardless, and can be very secure. EMV is not wireless, is inside a card, and is very secure.
What does EMV Fallback mean?
EMV fallback transactions occur when an EMV-enabled payment card is used in a chip card reader, but the payment cannot be completed using EMV technology. In these instances, the merchant might “fall back” to processing the payment by swiping the magnetic stripe.
Fallback is defined as transactions that:
1. Are Performed using an EMV Chipped Card
2. Are Used at a Terminal that indicates that it is capable of reading the EMV Chip
3. The transaction is attempted or completed using the magnetic stripe, rather than the EMV chip.
4. Transactions that are manually entered are not considered a fallback
Reasons for Fallback include:
1. Inoperative or malfunctioning chip reader
2. Settings in the software for the terminal are overriding prompts for EMV
3. Out-of-date software in the terminal
4. A malfunctioning chip in a credit card
How does this affect my business?
First, if a business is unable to accept an EMV-enabled chip card and a customer is forced to use their magnetic stripe on the back of the card, the business is 100% liable for any fraud dispute. The business will automatically lose the dispute and be liable to refund the customer, regardless of if it was really a fraud or not.
Second, swiping an EMV chip card in an outdated terminal could result in a bank-initiated chargeback even if the transaction wasn’t fraudulent. This is a measure the card-issuing banks implemented to dissuade merchants from swiping chip cards.
How do i prevent EMV fallbacks?
- Make sure you’re using EMV enabled technology (upgrade if you haven’t)
- Always attempt a chip transaction before swiping a card
- Only consider a magnetic stripe transaction as a last result
- Reach out to us and see if they can block fallback transactions
- Adopt EMV for debit cards, credit cards, ATMs, and all POS sales
- Take steps to prevent fraud resulting in added fees and chargebacks