Operations – EVM Cards

By Daniel Thor, Bellissimo Foods

There is no doubt that credit card fraud is a very real possibility for both merchant and consumer alike. In 2012 credit card fraud resulted in the loss of $11 Billion dollars to credit card issuers and merchants, with credit card issuers taking the majority of the loss. Almost half of the world’s credit card fraud now happens in the US. In order to combat the problem card issuers developed new technology to reduce the ease of credit card fraud by placing a chip in the credit card, called EMV cards.

EMV cards are quickly becoming the standard, and with them comes a shift in liability from the credit card issuer to the merchant. Here is everything you need to know about the eventual liability shift, and how to avoid being on the receiving end of credit card fraud.

EMV cards are imminent in the US. EMV cards were developed as a direct result of the ease and sheer volume of fraudulent credit card transactions using the magnet strip technology. EMV stands for “Europay, MasterCard and Visa”, who are the companies that developed the protocols that make the card successful. The card itself includes a new integrated circuit that transmits a dynamic set of data every time the card is used, thus making it harder and more expensive to counterfeit.  The catch is that it requires a new type of reader to process.

You might be asking, “Can’t I just keep my current card reader”?  The answer lies in where the liability will be placed without a new reader. In the past, if a fraudulent transaction is made, the credit card issuers or merchant service company has typically been liable rather than the merchant who accepted the card. Once EMV cards are implemented, the liability will shift to the link in the chain that has the weakest security (or is the least EMV compliant), which in almost all cases, is the merchant (aka you).

The transition to EMV cards will take place sooner than you think. The liability shift will take place in October of this year. Credit card companies have already started transitioning to the chip cards, and many of you might already have an EMV card in your wallet. During the transition, cards are being issued with both the EMV and magnetic strip technology so there will not be a loss of business if you don’t have a new reader right away. If you do have a new reader and a counterfeit magnetic strip card is presented, the liability for the counterfeit will be the responsibility of the card issuer.

You do need to protect yourself from fraud liability. As equipment, upgrades have the potential to be both costly and time consuming, its best to get started early. Talk to your credit card merchant services representative soon to determine cost and implementation to decide the benefits vs. potential liability risk that fraudulent transactions present. You might want to see what other services to upgrade at the same time such to support such a change, such as building a support or loyalty program, accepting mobile payment transactions, etc. If you have additional questions please contact your Delco Foods Sales Representative.

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