Chip-based cards are coming to the U.S. soon and will offer consumers added security over traditional magnetic stripe cards.
Last year saw lots of credit card breaches take place at popular retailers like Home Depot and Target. The reason is because magnetic stripe readers are very susceptible to hacking. Retailers who have not done so already will have to upgrade their point of sale devices to make sure they are equipped to accept contactless payments. Things are changing in the payments industry. Merchants who do not want to lose their competitive edge in the market should make an investment in the technology sooner rather than later.
Deadline for an upgrade in POS systems is approaching
PaymentsSource pointed out that by Oct. 1, any company that has not upgraded its POS systems to accept EMV-chip transactions will be liable to pay expenses related to fraud. These rules were strongly endorsed by Visa and other major U.S. credit card companies. A survey of eight financial institutions, representing 50 percent of U.S. card transaction volume, forecast that by the end of this year, approximately 63 percent of debit and credit cards will contain EMV chips. By 2017, the number of cards that have chips embedded in them will be approximately 98 percent, according to Payment Security Taskforce.
The news source also noted that Visa maintains an online information center to help prepare merchants for the switch to chip-embedded cards. The resource center includes a 10-step implementation guide, employee training materials and other relevant information. Stephanie Ericksen, Visa’s vice president of risk products, said in a May 4 press release that the switch to EMV-chips is a necessary move in the fight against fraud.
“Chip technology will bring an important new layer of security for credit and debit cards by helping to make stolen account information useless to criminals,” said Ericksen, according to PaymentsSource. “It is a priority to increase merchant awareness and understanding, given a liability shift in October 2015.”
Educating merchants is a part of the upgrade process
PYMNTS discussed how Visa’s announcement was made at the start of National Small Business Week. Visa has also embarked on a Small Business Chip Education Tour that involves collaboration and discussion with payment providers and financial institutions. The purpose of the tour is to help merchants become more knowledgeable about EMV chip-enabled technology.
Avid supporters of chip technology believe it can help limit counterfeit fraud for in-store purchases. Chip-based cards generate a unique code each time they are used for a transaction. As a result, if hackers were to steal payment data, it would be useless to them. The same is not true for conventional magnetic-stripe cards. Ramon Martin, Visa’s head of global merchant sales and solutions, explained that the company is helping merchants prepare for the new technology.
“Visa is committed to supporting businesses of all sizes in the transition to chip technology,” said Martin, according to PaymentsSource. “With this merchant toolkit, we want to provide easy-to-access educational and training resources to help get businesses chip-ready.”
It is noteworthy to mention that chip-based cards have been around for a long time. In Europe and Canada, they are commonplace and it is curious why the U.S. has been slow to switch until now. Regardless, another benefit of merchants upgrading their POS systems, in addition to the added security, is that they will be compatible with contactless mobile payments systems like Apple Pay. Paying for things with a smartphone is another trend that is gaining steam and retailers wishing to offer the latest in consumer technology should be prepared.Back To Blog