Say Goodbye to Swipe & Sign

The payment process of swiping and signing will soon be a thing of the past.

In October of this year, credit card fraud liability will be passed on from the bank to the merchant. Along with this change, a new transaction process will be required nationwide: You will insert your card into a slot where the machine will read a microchip, not a magnetic stripe. This payment system is called EMV.

EMV — which stands for Europay, MasterCard and Visa — is a global standard for cards equipped with computer chips and the technology used to authenticate chip-card transactions.

The U.S. is the last major market to still use the old-fashioned, unsecure swipe-and-sign system, explaining why almost half of the world’s card fraud happens here. EMV enables the use of PIN numbers for credit transactions, preventing the fraud and breachment of stolen credit cards.

Say Hello to Chip & PIN!

The new EMV system brings a lot of changes for both consumers and merchants. We’ve put together a Q&A to help you understand what the switch will mean for your business.

What makes EMV more secure than traditional cards?

New cards will have a computer chip which looks like a metallic square on the front of the card. Magnetic stripes on traditional cards contain sensitive data targeted by counterfeiters. The magnetic stripe code never changes, so the counterfeiter can use the stolen information over and over again.

With the new EMV card, the chip electronically creates a unique code for each transaction. If a hacker steals the chip information from your POS, they won’t be able to duplicate the card because the code won’t be reusable.

How are EMV cards different?

Instead of going to a register and swiping your card, you are going to do what’s called card dipping, or inserting your card into a terminal slot until the machine has processed the transaction.

Some EMV cards also support near field technology, where instead of dipping or swiping, you can quickly and simply tap the payment terminal and it will pick up the embedded payment code.

How will this effect the checkout process?

Checkout will take longer as customers are required to keep the card in the terminal slot until the machine has processed the transaction. People may also forget to remove their credit cards from the terminal, especially at stand-alone payment terminals such as gas pumps.

In addition, cardless options such as Apple Pay and Google Wallet will become more viable. They offer faster, more secure transactions without requiring retailers to invest in new EMV card readers.

What about the liability shift?

To drive fraud out of the picture, liability will shift from the bank to the merchant. If a merchant is using an old system, they can still run a transaction with a swipe and a signature. However, they will be liable for fraud if the customer has a chip card.

What does this mean for my business?

Small businesses will be even more of a target if they keep lower security standards. While there is some cost involved with switching to EMV, businesses that do not adapt will be at risk for greater costs and consequences.

Notifying customers of a breach is expensive and required by law. The minimum premium for this usually starts at $10,000 ‐ $15,000. Standard insurance does not cover this loss, so you will also need data breach insurance to protect your business.

To keep your business secure from data breaches, you can update your POS system and hardware to allow for EMV.

If you would like to learn more about a POS system with integrated EMV hardware, check out Rapid RMS.

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