Although EMV enabled credit and debit cards – or chip cards - have been in use for several years now, there are still a lot of misconceptions about EMV floating around out there.
If you’re new to accepting payments, or if your business operates in a region where swiping cards is still in fashion, then you may be familiar with some of the myths or misconceptions surrounding chip cards for payments. We’d like to clear up any misinformation or confusion that exists, in order to ensure merchants have the full picture about what’s best and safest for their business.
An EMV payment is any credit or debit transaction you process using an EMV enabled credit or debit card. These cards are characterized by a small computer chip embedded on the front of the payment card. This computer chip, and the terminals and hardware that can read it, are part of the new EMV standard for the payment industry, which is replacing the old magstripe standard.
Below are some misconceptions related to EMV payments that you may have heard:
You Can’t Accept TipsWhile you will no longer require a printed receipt for the customer to sign and specify the tip amount on, you are still able to accept tips using EMV enabled cards and terminals and it's actually easier and more straight forward than the traditional method. If your business includes tipping in its transaction process, you simply need to bring the terminal to the customer’s table, enter the transaction amount, then your part is done and you pass the machine to the customer. From here, the customer inserts their chip card into the terminal and is able to select from a number of predetermined tipping options, or they enter their own selection, before completing the transaction as usual by entering their personal PIN. If you do not have a wireless terminal, it's perfectly normal to request that your customers pay at the front of your store or at a checkout counter on their way out.
Accepting payments with a tip option on an EMV enabled terminal can actually be faster than using a traditional magstripe card because you can remove the extra steps and manual math required in traditional swipe and signature payments. To learn more about tipping with EMV payment cards, check out this article that includes a helpful infographic and overview of the process.
Chip Credit and Debit Cards are More Expensive to AcceptThe credit card processing fees you pay when you accept an EMV enabled card do not change based on whether the card has an EMV chip or not. While the fee you are charged to process a transaction can vary if you benefit from interchange plus pricing, it would be based on the type of credit card used rather than if it is a chip card or a card with just the magstripe. In this case, the card "type" refers to whether the card is just a basic credit card or if it's a high-value rewards or travel card. You are not charged any differently for processing an EMV transaction versus a swiped transaction.
In fact, it can actually be less expensive to accept EMV enabled cards because doing so helps protect your business from the liability associated with accidentally processing a fraudulent transaction. Since October 2015, if you process an EMV enabled card as a magstripe card (by swiping it) and the transaction turns out to be fraudulent, then your business would be responsible for repaying the cost of the transaction to the card’s rightful owner. As long as your business is equipped to accept EMV enabled cards and you process the transactions using the chip, then the issuing bank will be the one responsible for the fraudulent charge.
The EMV Computer Chips are Easy to HackThe EMV chips were introduced to be the new payment security standard and to replace the outdated magstripe standard, precisely because the computer chip on the card is so much more secure and harder to replicate than the magnetic stripe. The EMV chips were designed to include additional security features for merchants and consumers when completing card-present transactions. The EMV chip cards are more secure than their magstripe counterparts because the cards feature two important technology upgrades.
First, to complete and EMV transaction you need to successfully complete two-factor authentication because the cardholder needs something they physically have, their payment card, and something only they know, which is their unique personal PIN.
The EMV chip cards also feature advanced technology so that each transaction creates a unique transaction ID that cannot be replicated, meaning this data is dynamic and constantly changing, compared to the static data that is stored on the magnetic strip. The rate of card-present fraud has been significantly reduced wherever EMV has been adopted, demonstrating how effective EMV technology can be at reducing card-present fraud.
EMV was Implemented to Make Merchants Responsible for LiabilityWhile there was a liability shift associated with the introduction of EMV enabled payment cards, that is not why the technology was introduced.
The goal of EMV payment cards was to introduce a more secure payment technology that would reduce the prevalence of fraud in card-present transactions. The liability shift acts as an incentive for otherwise late-adopting business owners and merchants to upgrade their equipment faster than they may have if there wasn’t the risk of being liable for card-present transactions. Without penalizing outdated and unsafe payment methods, there will likely be much less voluntary adoption of the newer standard, which means more fraud, which hurts everyone.
EMV Will Make Transactions Take LongerThe opposite is actually true. If you’re unfamiliar with EMV transactions, the added process of waiting for a customer to insert their payment card and enter their PIN might seem like it would take longer to process. However, customers can often complete the transaction using their PIN much faster than it takes to pass the card back and forth with an employee who is helping complete the transaction, wait for a receipt to print and be passed to the customer, the customer signing it, then the customer returning it to the checkout employee.
EMV technology is also present in tap and pay (or NFC) enabled cards which can reduce the time needed to process a transaction to only a few seconds, making your checkout significantly faster and easier for both you and your customer. If time is money, then chip cards help merchants cash in.
Small Businesses Don’t Need to Upgrade to Accept EMVThe EMV payment standard and it's accompanying liability shift applies to all businesses that accept debit or credit cards, no matter what size they are. If your business accepts credit cards, then you should understand and prepare your business to be able to accept EMV payments by upgrading your hardware and equipment.
It is especially important for smaller businesses to upgrade their infrastructure to the new EMV standard because they can often be targeted by fraudsters because they count on smaller businesses not having the same security measures in place as larger, more established businesses.
There really is no downside to embracing the new EMV standard, save for perhaps the added cost required to upgrade your equipment, but even that upfront cost is offset by the many benefits of EMV payments.
If there are any other potential misconceptions that you’ve heard about EMV technology, you can contact our friendly team of Helcim Gurus who can help clear up any myths and help set your business up for success.