As the U.S. continues to expand its nationwide migration to EMV chip technology, it is still a process that is a bit complicated to merchants and customers alike. What is EMV chip technology? What is required of merchants and customers in the switch to EMV chip technology? Allow us to walk you through the basics. EMV chip technology is one of the best payment technology used to protect against card fraud in offline transactions. In fact, it has been used around the world with France being the first to use it in 1992 and the U.S. being one of the last developed countries to implement it.
Remember the recent wave of data breaches and credit card fraud that swept country in 2014 that affected Target and other retailers? That increase in fraud cost merchants, financial institutions and credit card companies millions in terms of wasted time, resources and money and prompted credit card companies to accelerate their plan of rolling out the EMV chip technology. The EMV chip technology is a payment technology that was first developed by Europay, Mastercard and Visa and was later adopted by companies such as China Unionpay, Discover and American Express through the EMVco. It involves the use of microprocessor chips that are embedded on debit and credit cards.
Benefits of the EMV Chip Technology
With the rate of Credit card fraud having doubled in the last 7 years, the EMV chip technology is expected to reduce fraud by making it almost impossible to copy information or produce counterfeit cards hence reducing Card Present fraud. Secondly, we all need peace of mind. The technology provides this by improving security therefore protecting the customer and inspiring confidence to use credit cards without fear. It also enables the credit card company to program fraud prevention measures. For example, if you lose your card and report this, the company can use the EMV chip technology to disable the card and minimize losses. Finally, the technology secures cards to enable the addition of future value-added applications.
What the Switch Means For Merchants and Customers
Merchants and financial institutions will require switching their hardware and software to new payment processing systems. Indeed, those who have not yet invested in EMV compatible systems will be held liable for any card present fraud. Merchants who have already made the switch however are not held liable for card present fraud and instead, the company shoulders this responsibility. On the other hand, customers will be expected to activate the new chip cards they are issued with and familiarize themselves with the payment process.
Unfortunately, EMV does not affect internet, telephone and mail order transactions and therefore, card not present fraud is expected to increase. On overall however, they are a great start in the fight against credit card fraud.
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