The EMV Shift Has Arrived: What Now?

The first of October marked the United States deadline for the EMV liability shift. Although the term EMV is becoming increasingly commonplace, many consumers and merchants alike are unsure of what this mean for them. To put it simply, beginning this month, banks and merchants who did not transition to EMV or “chip and pin” payment cards and terminals will be held liable in the case of card-present fraud. As for cardholders, say “so long” to the swiping and signing of receipts and “hello” to the dip of a card.

EMV is a global payment standard originally developed by Europay, MasterCard, and Visa, that relies on computer chips to store data securely. The credit and debit cards in use in the US up to this point employed magnetic stripes that would transfer information from cardholder to merchant. Within the mag-stripe, cardholder’s information is static or unchanging. Because of the high risk of fraud and the ability to counterfeit this type of data transfer, mag-stripe cards are becoming increasingly outdated.

Chip and pin cards, however, enable the use of dynamic or consistently changing transaction codes. The one use only method makes it impossible for fraudsters to copy the information on a credit card and reuse it over and over again. Although this technology may not prevent criminals from stealing the information, it will prevent them from gaining profits off of that information.

Consumers who are issued EMV cards will conduct transactions in a slightly new way. The primary method will be the dip of a card into a payment terminal, a slight pause to allow the unique code to be transmitted, and either a signature or the typing of a pin. Not a hugely drastic change from the current methods, the use of a pin or signature will no longer be differentiated depending on credit vs debit cards, but on the type of EMV card that was issued.

Although the deadline was the first of October, not everyone in the country has already made the switch. Both consumers and merchants will take time to adapt to the new processes. However, fraudsters are already on the move.

One of the last developed countries to migrate to the newest technology, the United States is expected to not only see a shift in accountability, but a shift in fraud as well. In the past, much of the world’s card-present fraud has taken place in the United States. In recent years we have seen data breaches of companies as large as Target and Home Depot that have risked the credit card data of thousands of cardholders. With the switch to EMV, card-present transactions will become increasingly secure, which will, in turn, push fraudsters online.

The merchants who will be most affected by the country-wide switch to EMV cards will be card-not-present merchants. If fraudsters are afraid to take advantage of brick-and-mortar transactions, they will look elsewhere. Merchants should protect themselves from online fraud, both criminal and otherwise. Strengthen security and reevaluate processes; it will make all the difference.

Monica Eaton-Cardone is the Co-founder of Chargebacks911

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