HMBS_EMV_CHIP_BlogOctober 2015 is literally a few days away. Typically small business-retailers are strategizing holiday promotions, but this year, in addition to regular business operations, millions of merchants are preparing to face the liability shifts of the EMV-mandate. Humboldt Merchant Services has put together a list of points that every merchant should know about EMV.

What does EMV stand for?: EMV is an abbreviation for Europay, MasterCard, and Visa — the three organizations that developed the initial specifications for smart cards.  Each EMV card contains a chip that contains an embedded microprocessor that offers a level of security beyond traditional magnetic stripe cards.

What are the benefits of the switch to EMV?: The number one benefit of EMV is reducing credit and debit card fraud resulting from counterfeit, lost or stolen cards. There is also a benefit to card issuers because the liability of fraudulent transactions will now belong to merchants who are not EMV capable and certified.

Validation can vary by issuing bank: There are four ways to validate a cardholders' identity: online PIN, offline PIN, signature and no-pin. The latter is for low-value transactions like vending machines. Each verification requirements is determined by the card issuer before it is provided to cardholders.

Explaining different types of fraud: The technology built into every EMV card is designed to prevent transactions from being made with counterfeit cards. If a card is reported stolen the liability shift does not apply.

“Dip” or swipe?: For the foreseeable future, EMV cards will have both the chip and magnetic stripe allowing  customers shop at a merchant who has yet to upgrade their terminals. However, swiping a card at an EMV-terminal won’t work. Chip cards must be dipped- or- inserted into the terminal where the chip reader is located.

Don’t rush a “dip”: When a customer dips their card, the card must stay in the terminal until the transaction is complete, because the chip communicates with the terminal. Premature removal may cause the chip to question the authenticity of the terminal or vice versa, and the transaction can be declined. Be sure educate service workers who handle the point-of-sale terminals at your business that they’ll need to explain to customers how “dipping” works. Note: Also emphasize that reps monitor transactions and remind patrons to remove their cards once the transaction is complete.

Tighten your online security: Criminals are also aware that their days of counterfeit cards are numbered. Increasing the security of online transactions and will help you to limit your exposure to online fraud.  

Dynamic data: Every EMV-card transaction gets its own dynamic data, for verifying users, but the other information and data travels the exact way it always has. With each transaction getting its own special code, it makes it tougher to use stolen information, like account numbers, because EMV cards can’t be counterfeited.

What are the negative codes currently associated with EMV?: For Visa, a 62-code is for a Counterfeit Transaction Dispute and an 81-code is for Fraud, Card Present. For Mastercard Counterfeit Fraud, you will see a 4870-code, but a never-received-as-issued (NRI) fraud dispute will be a 4871-code.

EMV and PCI working together: The experts at emv-connection.com explain the collaboration this way: “EMV chip has strong security features that have been proven to reduce counterfeit card fraud at card-present retail environments. The PCI Data Security Standard (PCI DSS) provides other complementary levels of security necessary when the cardholder information reaches the merchant’s system.Rather than focusing on a specific category of fraud, the PCI DSS seeks to protect cardholder and sensitive authentication data anywhere this data is present within the payment eco-system, thus limiting the availability of this data to fraudsters. When used together, EMV chip and PCI DSS can reduce fraud and enhance the security of the payments ecosystem.”

These are just a few, important things merchants like you should know about EMV and how it can affect your business. Be sure to do your research to find out exactly what your business' liability might be after the October 2015 mandate.

For more information about Humboldt Merchant Services, visit our website today or call 877-387-5642.

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