It is hard to avoid the warnings about the growing threat of identify theft and data breaches these days, a trend which has seen an increase in the demand for greater security. Swiping and signing credit cards is a process that is quickly becoming outdated, thanks in part to Europay, Mastercard, and Visa (EMV). EMV credit card processing has taken the traditional method of credit card processing and replaced it with new, chip-enabled technologies for payments that promote more advanced data security.
EMV credit card processing appears almost identical to the traditional method but comes with a new key feature: an additional security chip on the magstrip which must be authorized and scanned during each transaction, which leads to safer shopping and decreased risk for credit card fraud.
Security with EMV Credit Card Processing
The traditional method of credit card processing used to have the card’s 16-digit number linked to the magnetic stripe on the back of the card. Dave Witts, President of U.S. payment systems, proposed the scenario that if a thief copies a magstripe, they can replicate data continuously since the data never changes.
EMV credit card processing, however, assigns a unique, specific transaction code to each chip for each of the cardholder’s individual purchases, which means that simply memorizing the credit card number is insufficient to complete a purchase. Now, the physical manifestation of the card itself is required.
The Research Director for Retail Banking at Aite Group, Julie Conroy, explains that with EMV credit card processing, consumers are guaranteed more security. As Conroy explained, EMV credit card processing makes copying cards to commit fraud more difficult.
The Types of EMV Credit Card Processing
There are actually two general types of EMV credit card processing:
1. Chip and PIN
The most secure form of credit card processing, Chip and PIN requires that consumers enter their own personal identification number to authorize any transaction. The benefits of Chip and PIN are obvious, as evidenced by improvement of fraudulent losses in the U.K. in 2004 to 2008, where the money lost to fraud dropped initially $356 million to shockingly less than $100 million.
2. Chip and Signature
With this type of EMV credit card processing, consumers are required to sign their name to receipts after every transaction, ensuring their information is tied to their actual handwriting.
EMV Credit Card Processing and You
EMV credit card processing has become the global standard for transactions in recent years, but the trend only recently began in the U.S. Retailers in the U.S. have been reluctant when it comes to investing in newer credit card readers, not to mention the potential liability issues and compliance rules that come with EMV credit card processing.
As the threat of credit card fraud grows in the public’s mind, the security features offered by EMV credit card processing are growing increasingly important. According to Aite Group, by 2016 70% of credit cards and 40% of debit cards will ultimately become chip-enabled. If these estimates prove to be true, retailers in the U.S. will face the potential of tremendous loss at the cost of refusing to make the transition.
For businesses to thrive in the next few years, EMV credit card processing should become a top priority for the expansion of payment options. Let One Payment be your guide in implementing this processing solution for your business.