The 1-2-3 of EMV

Wednesday, August 05, 2015

EMV is coming full force to the United States, and as a business owner, you may be making preparations to accept chip or smart cards. Maybe you purchased your EMV-ready terminal, but it’s still in the box. Or perhaps you’ve plugged it in, but the software isn’t installed or working properly. Possibly you’ve got it all assembled, but your employees have no idea how to operate it. Or—gasp!—you haven’t thought about EMV at all.

If you are swimming through the choppy waters of EMV readiness, get ready for a life preserver. Before we get into the nuts and bolts, a little history…

For more than 40 years, businesses and consumers have used magnetic stripe cards and compatible terminals to complete payment transactions. That, however, is about to change as EMV chip cards make their way to the U.S.


What is EMV?

It’s a global payment standard that provides a consistent cardholder experience worldwide—designed to greatly reduce the chances you’ll receive a counterfeit payment card at your place of business. EMV-enabled cards contain a computer chip that is activated and read when inserted in the card reader or tapped for contactless acceptance.

These chips are embedded in credit and/or debit cards that also have a magnetic stripe, and can be used at businesses that support either type of payment card. You may have already seen them, as card issuers have started issuing chip cards to consumers.


So what’s the big deal about this EMV stuff?

A liability shift is on the horizon. Come October 1, 2015, you could be liable for chargebacks resulting from acceptance of lost, stolen or counterfeit cards. Generally, liability for these chargebacks will shift to the party using the least secure technology. If you do not have an EMV terminal installed and working, that could be you.

Now let’s explore how you can prepare.


Find out before you freak out

The liability shift deadline does not mean the sun sets on your business’s ability to accept cards, and you’ll wake up to a bleak day of doom on October 2. There are options.

Start with doing some research. Check your business analytics to assess how many chargebacks due to fraudulent transactions have occurred in the past several months. Pretty clean record? That’s good news. You may have time to breathe and get EMV-ready, even if it’s not by the deadline.

Record not so spotless? You may want to act with a little more urgency.

Note that EMV is not mandated either by the card brands, federal or state governments. But it is a good idea to consider migrating to EMV to help you avoid costly fees and loss of business due to customer preferences ahead of the target date.

So why comply if it’s not mandated? Besides avoiding the costs due to fraudulent card chargebacks, you will be providing security and a more secure acceptance environment for you customers. As more EMV cards are distributed, consumers may prefer safer purchase methods and may expect to dip instead of swipe.

Due to the mass adoption and success of EMV across the world, it is clear EMV isn’t going anywhere. Sixty-six percent of card present fraud in the U.S., is due to acceptance of counterfeit cards by businesses like yours. EMV is an effective security measure against counterfeit cards, but it’s important to understand that EMV alone will not be enough to protect your business from the devastating consequences of a data breach. Learn how EMV, tokenization and encryption can protect your data on every level here.


Getting EMV-ready

Step 1: Analyze your current situation

Start by evaluating the system that you are presently using at your business. Try to get a sense of what you will need to do in order to implement a system that is EMV-ready before the deadline. Is it EMV-capable or ready? Does your software need to be updated and what is the cost? Is your POS provider ready for EMV acceptance? Do you need new payment hardware—PIN pad or signature capture pad? Is EMV contactless a need for your business?

A common misunderstanding is thinking you are set up to accept EMV cards if your current POS system is equipped with an EMV reader slot. POS suppliers have been manufacturing EMV terminals for several years to comply with Europe and the rest of the world. In simple terms, the U.S. is the last developed country to roll out EMV, but many U.S. POS systems have either not developed the application code to accept EMV or certified to their processor for EMV acceptance, rendering that slot completely useless until the system is upgraded. There are also terminals, PIN pads and signature capture pin pads deployed that have EMV readers but may not be of a security standard level necessary for EMV card acceptance.

Next, evaluate if you should change your POS system, PIN pad or acceptance terminal.

If you installed your POS years ago, there will likely be a cost associated with upgrading both the hardware and software required to accept EMV payments.

If you haven’t already done so, spend some time researching cloud-based POS solutions that may offer superior features and functions with an easier user interface. Switching to a new POS provider and system altogether could be significantly less expensive and more beneficial long term than making the necessary upgrades with your current legacy POS vendor.


Step 2: Make the call to your POS provider and acquirer/processor

Talk to your POS provider about how they plan to adapt their hardware and software to meet the new EMV standards. Your vendor should be knowledgeable about EMV and currently preparing to roll out the software updates and new hardware required to ensure that their customers will be able to support chip-and-PIN by the deadline.

Some questions you should ask your POS provider:

  • Will I be responsible for ordering new hardware? What specifically will I need?
  • Are there any software upgrades I need to know about?
  • What is it going to cost to upgrade my system so it is EMV-ready?
  • Am I going to need to have an IT person on-site to install or implement anything? If so, how much will it be and how long will the installation take?
  • What exactly will be required on my end once I have the appropriate software and hardware?
  • How much training will my staff need in order to learn the new process for chip-and-PIN transactions—and who will train them?

And possibly the most important question to ask your POS provider: If they don’t currently offer an EMV solution, what are their recommended options?


Step 3: Going live

Whether you’re installing a new software upgrade or replacing your entire POS system, it can run the gamut from easy to very complicated. It all goes back to your initial research and determination if you’ll need to invest in new hardware, software or both.

You may be able to rely on your POS provider to complete or assist in the implementation. If you have access to an IT professional, that is also an option. One aspect that will be critical to your success is the training of your staff, as EMV will be new for both your employees and your customers. You are going to need to understand what customer verification methods are best for your business and if contactless would be beneficial.

But you don’t have to do it alone.


Get access to an advocate with options

If you need assistance, find a reputable card processing company to guide you through the implementation.

Heartland is one such company. Our industry experts can give you options that will be cost-effective and efficient to enable your business for EMV acceptance while reducing the chance your business will be fined for a breach of cards. From out-of-scope solutions to stand-alone terminals and more—Heartland can provide you with choices.

For more information, visit Heartland’s EMV resource page.