What you need to know about EMV chip cards
EMV Chip Cards, the way we pay in the United States hasn’t changed all that much over the years. Most merchants aren’t taking full advantage of the basic technology that is already available for processing payments, particularly chip cards and NFC payments (like Apple Pay and Google Wallet). While paying with cash remains one of the most popular methods of making purchases, innovation in payment technologies has been slow to arrive when compared to other parts of the world.
As a business, you’ve probably heard of EMV chip cards since many companies have already made or are planning on making an upgrade from magnetic stripe credit card readers to more secure chip card (or contactless) only terminals, hopefully within 2015, enabling your company for quick and easy EMV transactions. While supporting “chip & signature” or “chip & PIN” transactions will be easier than ever, it doesn’t go far enough to truly take advantage of this technological wonder.
The Old Mag Strip
Before the EMV chip cards were introduced, all cards had a magnetic stripe on the back. The stripe is like a long piece of tape that is on the back of the card. It has all the information about the card on it. When you go to the store, you swipe your card through the payment machine. That way the store can see all your card information.
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The stripe is made of tiny lines of magnetic material. The stripe is read by the payment machine and the information is sent to the bank. The bank then checks if the card is real and if the information is correct. If it is, then the bank will let the store give you what you want to buy. If not, then the bank will not let the store give you
The New EMV Chip
Many debit and credit cards have a magnetic stripe on the back. It’s similar to a large t-shirt tag that contains all of your card details. This includes the account number, security code, and expiration date. When at a payment machine the customer swipes their card through the machine which reads all the information off of it to process the transaction successfully.
Machines can read what’s written on the stripe because they use magnetic force to change magnetism in tiny aluminum lines found there. The information is then sent to our bank where it is checked again before any financial transactions take place with eligible parties involved in this bank to bank transaction online or otherwise.
Chip and signature VS chip and pin process
Many European countries have adopted the “chip-and-PIN system” for credit cards, but the US has yet to move to this system. The chip-and-PIN system requires a PIN as an extra security measure. This then requires the customers to enter the PIN to complete a purchase with their credit card. The chip in the card authenticates the user and prevents fraudulent activity.
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The US has mostly favored the “chip-and-signature system” for credit cards. This requires the customer to sign a receipt for the purchase instead of entering a PIN. This makes it much easier for the customer to complete the purchase and is deemed as an easier process. However, it is not as secure as it could be. The chip-and-PIN system is seen as a much more secure method of payment and has spread to most of Europe.
Enabled card readers
Chip card readers, such as the PayPal Chip Card Reader, are designed to open doors. They’re compatible with existing mag-stripe and NFC payment options, such as Apple Pay — helping you optimize your workflow and process payments in the most efficient way possible. Its PIN pad will also help secure your data in compliance with new chip-and-PIN standards.
EMV Chip cards Fraud
To spur businesses to begin the transition to EMV chip cards processing, MasterCard, Visa, and American Express began in October 2015 to shift the responsibility for card-present fraud to whichever party is least compliant in any given transaction. What does that mean? It can be confusing but fortunately, it’s a very specific case: if someone uses a fake chip card and shops at your store, you’ll be responsible.
To learn more about EMV card processing.