EMV compliance is a regulation all businesses should follow to ensure secure payment processing. Also known as chip technology, EMV uses a chip to protect the cardholder's payment information.
Compared to traditional magnetic stripe cards, EMV transactions are harder to counterfeit. By being compliant with EMV laws, businesses can prevent data breaches and lessen financial losses due to fraud liability.
What is EMV Compliance?
EMV compliance was established by and is an acronym for Europay, MasterCard, and Visa. The three, along with other cardmember associations, such as American Express and Discover, created chip technology to safeguard consumers and merchants from fraudulent credit card activity.
EMV also helps businesses minimize instances of chargebacks. This is when a cardholder disputes a charge because of fraud, to which the merchant must reverse the transaction. Therefore, cutting down on chargebacks will reduce revenue loss, processing costs, and product deficit.
Being EMV compliant means that businesses are using credit card point-of-sale (POS) systems that support EMV chip technology. Major credit card issuers had pushed for companies in the United States to transition to EMV-supported terminals by October 1, 2015.
On this date, liability for fraud also shifted, in which the merchant or card issuer that is not compliant with EMV regulations would now be liable for the losses caused by fraud.
According to Visa, over 3.7 million merchants have adopted EMV and are now accepting chip cards. While compliance with this new technology is not required and businesses will not be fined for failing to update their POS systems, it is still recommended to minimize financial losses.
What is Chip Technology?
Chip technology refers to cards that come with computer chips that can authenticate transactions and ensure that payment information cannot be accessed by thieves or hackers. When making a payment with an EMV card, the chip generates a unique transaction code that cannot be used again for another purchase.
On the other hand, when using magnetic stripe cards, also called magstripe, data does not change and can be easily replicated. This makes it easier for criminals to access sensitive cardholder information, allowing them to make fraudulent purchases of their own.
Chip cards are much more sophisticated because even if information from a chip is stolen and duplicated from one POS system, it would be unusable for future transactions.
Importance of Credit Card Chip Law and its Deadlines
EMV compliance laws are regulations established by credit card issuers and are not enforced by penalties or fines. However, if businesses do not implement credit card chip supported systems, they will be responsible for all fraudulent transactions and the damages that accompany them.
With the liability shift that took place on October 1, 2015, establishments that are not EMV-compliant will have more difficulty disputing chargebacks and will risk financial and inventory loss. Gas stations, however, have until October of 2020 to update their systems.
Since both deadlines have passed, businesses should have already transitioned to payment processing equipment that is compatible with EMV chip cards. New companies that are now or will soon be operating should look into POS providers that are compliant with EMV laws.
Upgrading to systems that support EMV is easier with modern POS providers. The latest platforms provide all of the necessary hardware and software that can be set up quickly and will meet the needs of small businesses and enterprises alike.
4 Key Steps to EMV Compliance
Businesses that are planning to upgrade to EMV compliant systems can streamline this process by following these steps-
1. Assess the Current POS System and Provider
Depending on the existing POS platform, businesses may need to update the system's software, hardware, or both. Owners should contact their providers for clarification about their POS applications and its compatibility with EMV.
2. Check Credit Card Terminals
All credit card terminals should be able to accept EMV chip cards. Businesses can consider upgrading their hardware to the latest technology, such as handheld devices or wireless card readers that work with EMV and contactless payments.
3. Implement a New POS System
If businesses are using an older system, they should look into advanced POS options that provide cloud-based software and EMV compatible hardware. Companies should communicate with stakeholders and refer to their budgets to find the best POS system that aligns with their needs.
By implementing a POS system that supports EMV, businesses can ensure that they are compliant with credit card chip laws and that they are taking the appropriate steps to secure their customers' data.
4. Train Employees
Once all payment-processing systems are updated according to EMV regulations, employees should be thoroughly trained on how to utilize the new technology.
To complete a transaction with EMV, a customer's chip card needs to be inserted into a compatible terminal. This contrasts magnetic stripe cards, as they are typically swiped into the POS.
Training employees will guarantee that transactions are processed securely and that the systems are used properly.
Although EMV compliance is not mandatory for businesses, it is necessary to ensure that customers' sensitive information is secure with every transaction they make. Being compliant with EMV not only prevents data breaches, but businesses will also lessen their liability to fraud and its damages.