Do I swipe or insert the card? It’s the new point-of-sale question most consumers ask themselves (or the cashier) when they come to make a purchase.
We can thank the new EMV chip cards and the new chip card reader payment terminals that require the new cards to be inserted, rather than swiped through.
Last October, major U.S. credit card issuers, such as MasterCard, Visa, Discover and American Express, required merchants to upgrade their POS terminals to accept the new chip cards.
But some businesses still ring up customer purchases using the magnetic strip on credit cards — even when the cards have the new, more secure chip technology.
This leaves those retailers (not the issuing banks, as before the October 2015 deadline) liable for fraudulent purchases.
Among the EMV avoiders, some retailers measure the costs to upgrade against the probable costs of fraudulent transactions and determine that, for their business, there’s no real return on investment to upgrade.
Other retailers claim that chip transactions slow down the checkout process, and sometimes lead to lost sales. And then others cite, as a deterrent to upgrade, the costly time needed to train their employees on the new chip card process.
So the question of whether or not to upgrade really comes down to whether the retailer is willing to take a chance or put forth the investment to mitigate risk.
There are plenty of reasons to consider upgrading, in addition to the serious liability shift. Here are a few:
- Consumer confidence: As consumers adjust to using chip cards, they may view retailers that don’t offer that payment option as insecure and move to the competition. Also, consumers won’t be the only ones who note which businesses haven’t upgraded; fraudsters will know, and will target those businesses.
- Credit acceptance: The Payment Card Industry Security Standards Council could move to levy fines against businesses that continue to ring up purchases with magnetic swipes. Ultimately, retailers that lose PCI accreditation would forfeit the ability to accept credit cards altogether.
- Customer experience: Any technology upgrade offers the perfect opportunity to deploy changes that will improve the customer experience and encourage them to come back again and again. Such retailers show customers that they are innovative and doing what they can to keep their data secure.
How to Upgrade to EMV
The risks of noncompliance, and the rewards of compliance, will likely only increase as time goes on. Luckily, making the change and catching up to EMV is not a complicated process.
First, contact a software vendor to verify that existing sales software is compliant. Then obtain and deploy the actual hardware required to take EMV cards. The best solutions will accept magnetic swipe, EMV and contactless near-field communication (NFC) technology.
Finally, retailers must ensure that their upgraded equipment meets certain approvals and certifications. EMVCo, an organization run by credit card companies, develops and manages specifications and testing for EMV adoption. EMVCo checks include card and terminal evaluation, security evaluation and management of interoperability issues.
After upgrading, the business is now ready to take EMV payments. But don’t forget that this technology is new for both employees and consumers. The sales staff will need training to guide customers through the new payment process.
While we will all soon be pros at the “chip dip,” old habits die hard. Supporting customers as they adjust to the switch, especially at self-service terminals, will go a long way toward a smooth transition.
Learn more about EMV payments here or leave a comment below with any questions.