EMV Chip Cards are Coming. Is Your Business Ready?

On October 1st of this year, a big change is coming to credit cards in the U.S. It’s a new-to-the-U.S. processing technology, first introduced in Europe in 1992 by Europay, MasterCard and Visa (EMV). Armed with chips that make fraud more difficult, the technology has been hugely successful in reducing card fraud resulting from counterfeit, lost and stolen cards.

 

EMV has already been adopted in eighty countries around the world to great results: card fraud in Canada dropped 73% in the three years after the new cards were rolled out, while in France there has been an 80% drop since the cards were adopted at the system’s introduction. The U.S. is one of the last countries to adopt the system, which seems overdue for a country that accounts for 51% of global payment fraud costs.

 

The chip card, also known as a smart card, has an embedded microchip that makes the card virtually impossible to duplicate by thieves and counterfeiters — a benefit for cardholders, merchants, and everyone except criminals. Merchants also benefit from fewer chargebacks (because EMV verifies that the cardholder was present), and more satisfied, less weary customers.

 


 

According to Scott McCammon, HP Mobility Product Manager, it’s estimated that 70% of U.S. credit cards and 41% of U.S. debit cards will be EMV enabled by the end of 2015. While this change will result in a more secure payment landscape, some of the risk and financial investment falls on small businesses. To help with the transition, we’ve outlined some potential challenges and tips to help business owners strategize and understand the main aspects of the change.

 

Hardware

The new EMV card readers have a slot that enables them to read the chips on the new cards. They will cost upwards of $100 each. The readers will be also able to read the magnetic stripe-cards we use today, and some will come with the ability to handle contactless payments like those made with Google Wallet.

 

HP is also ready for the switch. We recently announced the HP Pro Tablet Mobile Retail Solution, and also offer the HP ElitePad Mobile Retail Solution, both of which are designed to take advantage of EMV card reader devices.

 

Tip: Consider new hardware to be the fundamental step of the transition. To make the upgrade, you’ll need to purchase new card readers if your current ones aren’t compatible (look for the slot at the bottom of the reader).

 

Software

So, will you need to upgrade your software? That’s a complicated question to answer, as there are many variables involved. Some businesses will indeed have to upgrade but it really depends on the way your system is configured and the types of software you’re currently using.

 

Many payment processing systems in place today work in conjunction with inventory and customer/vendor information programs. Businesses that want to keep payment processing working with these other operations may need to make this investment if they want to keep everything linked. The cost of this kind of software runs the gamut of a few hundred dollars to thousands for more complex systems.

 

Tip: Before you begin the upgrade process, check your existing programs to make sure they’re compatible with the new software. Also, separating the payment process from inventory and other software may help save in upgrade costs.

 

Installation

This new system is not completely plug-and-play. The simplest implementation is when you have a standalone POS system (its only used for authorizing and clearing payments), which may require a software upgrade, either done remotely or by a technician (ask your payment processor). For more complex systems, it’s possible that you’ll need some outside help from an expert. Average rates are around $100/hour, and the work of setting up the system can take several hours, so plan installation for a time that will have the least impact on your business.

 

Tip: We recommend speaking to a consultant before you begin. If installation is not something you want to tackle yourself, hire one to you seamlessly implement the new process.

 

Fraud Liability Shift

This is the most critical one. Businesses that do not make the move to EMV will be liable for any fraudulent card payments made to them come October 1st.

 

Tip: With card fraud liability shifting to businesses, the big question is whether it’s worth it to upgrade to EMV. Considering that the US sees more credit card fraud than the rest of the world combined, the risk reduction is likely worth the effort and any required investment. And you may also gain efficiencies and improve customer satisfaction. The decision to upgrade is an important one.

 

We want to hear from you. Is your business planning on making the upgrade? Let us know why (or why not) in the comments.

 

Interested in learning more about how payment application security can work for your business? Read about payment card data encryption and how to implement P2PE technology into your retail landscape in the document attached below. 

 

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