Chip Card Processing

The Facts and Fiction about EMV

EMV, or chip cards, as they are most commonly known, are becoming the global standard for electronic payment processing. Chip cards have embedded microprocessor chips onto which the cardholder data is encoded, making chip cards much less susceptible to fraud than traditional magnetic stripe cards.

The chip interacts with the payment terminal (point of sale device) to dynamically authenticate the card, reducing counterfeit fraud and related chargebacks.

What Do Chip Cards Mean to You?

Your business should have been set up to accept chip cards by October of 2015 (unless you’re a gas station with pay-at-pump, which has until October of 2017 to comply) for card-present transactions, as per the guidelines set up by the credit card associations (payment brands like Mastercard, Discover, Visa, etc.) in 2014.

However, we find that many merchants have not yet implemented the appropriate terminals to accept chip cards, due to perceived complexity, lack of understanding of the program, or failure to realize the risks of not accepting chip cards.

Is It Complicated to Start Accepting Chip Cards?

No, the process of replacing current terminals with those that will accept chip cards is not complex. You can purchase new terminals, or, if you are a current leasing customer, you can do a terminal upgrade through your lease. The EPS Customer Service team will work with you to identify the best way for you to get new terminals in place as soon as possible.

The most important part of a terminal change is getting the terminal set up correctly, so you don’t accidentally incur additional fees. We have seen cases where terminals have not been set up to correctly identify debit card transactions (also known as Chip-and-Pin), forcing the cardholder to sign, which then incurs a higher interchange fee. Correct setup is critical, and our Customer Service team will make sure your business is set up correctly to accept EMV cards, whether debit or credit.

Do Chip Cards Cost Me More?

Aside from the costs associated with being unable to correctly process debit card transactions, as mentioned above (and which we take care of with our customers), accepting chip cards should actually cost you less.

A reduction in fraudulent transactions and the resultant chargeback fees are the most obvious points of cost reduction. In addition, Mastercard, Visa, American Express, and Discover have all provided incentives to accept chip cards, including potentially waiving a merchant’s annual PCI-DSS audit when certain EMV thresholds are met.

What Are the Risks of NOT Accepting Chip Cards?

The biggest risk, by far, is your liability for fraudulent transactions. Simply put, if you accept a card that doesn’t have a chip (a standard swipe card), and it’s a fraudulent card, the issuing bank is liable for the fraudulent charges. On the other hand, if you’re presented with a counterfeit chip card , and you can’t dip the chip and swipe it instead, YOU could be liable for the fraudulent transaction. This is called a “liability shift” – and it’s a big deal. That’s why you want to get your new terminals as soon as possible. You’ll be protecting both your business AND your customers.

EPS Quick Notes

Most US-based cards will be replaced with chip cards (EMV cards) upon card expiration or sooner.
Most US-based banks are in the process of re-issuing cards with EMV chips
Chip cards increase security and minimize fraud risk
You can continue to process cards by swiping the card – but there may be additional risk to your business if you choose to do so