EMV Compliance: Everything You Should Know

You’ll just have to keep reading to find out.

What is EMV Compliance?

EMV is actually an acronym that stands for "Europay, Mastercard and Visa" - the three companies that banded together to establish new standards for credit and debit card security and compliance in the first place. Open your wallet and take out one of your credit cards right now - the chip that is present, usually on the left side of the card, is ultimately the cornerstone of what EMV compliance is all about.

That chip is designed to make modern day credit and debit cards far more secure than past alternatives, especially when compared to the magnetic stripe-based cards that were common for decades. The problem with the magnetic stripe is that, while it's secure from a certain perspective, the data contained on it never changes. Anyone who has access to that data - which someone would if they stole your credit card, for example - instantly gets all the personal and private cardholder information along with it.

For years, this has made magnetic stripe cards prone to counterfeiting, partially because the data never changes and partially because it's so easy to do. EMV cards, however, create a unique transaction code every time you use it that CANNOT be used again. If someone tried to duplicate your card based on a specific transaction (like if you accidentally used your card at a credit card skimmer), they wouldn't be able to use it again because the code itself is always different. In all likelihood, when someone tried to use that duplicate card, the transaction would just get denied.

Why Does EMV Compliance Matter?

Simply put, you should care about EMV compliance for one very important reason: liability.

It's always an important topic but in this particular case, it's also one that impacts small and medium-sized businesses in particular.

Under the old rules, if a fraudulent purchase was successfully executed by someone who had stolen a credit card, liability for that fraud fell to the credit card issuer. This is the way things operated for years until EMV compliance became a factor.

Now, if a fraudulent purchase is successful, the working theory is that it has less to do with the card (because the EMV chip is supposed to be so secure) and more to do with your inability to actually use that chip in the way that it was intended. Because of that, liability was  shifted from the credit card issuer and onto the business involved in 2018. If you were only accepting credit card payments via a magnetic strip as of October of 2018, your business would automatically be held responsible for all fraud-related charges—end of story. EMV compliance simply means that you’ve upgraded your point-of-sale equipment to machines that can take the chip or the magnetic stripe depending on the preferences of your customers. If you did make the decision to upgrade by the deadline back in 2018, and were involved with a fraudulent charge, you wouldn’t be liable - which, depending on the type of business you're running and the average dollar amount associated with each transaction, will likely more than pay for the cost to upgrade in the first place.