EMV and the Changes it Brings to Credit Card Processing

What you need to know about the October 1, 2015 liability shift

The way you accept credit card payments changed in October 2015, thanks to EMV (Europay, MasterCard, Visa) card security improvements. Liability for card-present fraudulent transactions shifted to businesses that are not using processing terminals that accept chip-embedded (EMV) credit cards. This October deadline was set by the major card issuers to decrease counterfeit card transactions in the U.S.

Chip-embedded cards are more secure than magnetic stripe cards because the chip provides dynamic authentication information that changes for each transaction. The magnetic stripe currently used in the U.S. contains static data that can be easily stolen and used for fraudulent transactions.

Currently, if a customer uses a counterfeit card at your business, the card issuer is liable for the charge. Beginning October 1, 2015, if a customer uses an EMV card for a counterfeit transaction, but your business is not using an EMV-enabled terminal, your business is liable for the charge.

The United States is late in adopting chip technology and the improved security it brings. EMV transactions represented 32 percent of the world’s credit card transactions from January 2014 through December 2014. During that same time period, only .12 percent of U.S. transactions were EMV.

The chip-embedded cards and the EMV-enabled terminals that process them represent the biggest change in the credit card processing industry in 35 years (since we switched from the “knuckle busters” to terminals). The new technology brings changes that may take a while for you and your customers to get accustomed to:

  • The EMV card should be in the cardholder’s possession for the entire transaction.
  • The cardholder must insert the card into the terminal, rather than swipe it, and leave it there until the terminal indicates they can remove it.
  • The card issuer determines if a PIN will be required for the card, or just a signature, and the cardholder should be aware of what is required.
  • More time will be added to each transaction because it takes several seconds for the EMV card to process.
  • Make sure your terminal is activated to accept EMV cards. Your terminal may have a card slot, but it may still need to be programmed to accept chip cards.
  • Magnetic stripe cards can still be swiped with your EMV-enabled terminal, if that is what the cardholder has.


New procedures for accepting credit cards at your point of sale

The October deadline for EMV compliance has come and gone. Merchants have new equipment, cardholders have new cards. And with all that new hardware comes a new procedure for processing transactions at your point of sale.

Accepting EMV cards isn’t difficult, but it’s different enough that it might cause some initial confusion among your staff and clients. In the interest of eliminating such confusion and ensuring smooth transactions at your point of sale, we offer the following guide.

  1. Select your transaction and card type, then enter the amount of the transaction. Even if your client presents an older magnetic stripe card, you cannot skip this step; simply swiping the card to initiate a sale no longer works.
  2. If the client is using an EMV card, they need to “dip the chip,” or insert their card into the terminal. Hand your terminal to the client or turn it to face them, then instruct them to insert their card into the smart card slot chip side first and face up until they feel it click. Tell them to leave the card in the slot. Clients using magnetic stripe cards do not need to do this.
  3. The terminal may prompt the cardholder for a card PIN.
  4. Make sure they press Enter after they’ve entered their PIN.
  5. Your terminal will now process the transaction.
  6. The client should remove their card from the smart card slot when the terminal indicates.
  7. If you have swiped an EMV card, you may need to hit the red “X” key and start the transaction over then insert the card.
  8. If the client was using a magnetic stripe card or their smart card does not require a PIN, have them sign the printed receipt. Be sure to check the back of the card to verify the signature and hand the card back to the client.

And that’s it. Review these procedures with your sales staff and you’ll be experts in no time!