EMV Credit Cards

Get used to the EMV credit cards because they’re gonna be here for a while.

Financial institutions here in America are starting to catch up with the rest of the civilized world. They are currently transitioning all credit cards, financial institutions, businesses and card holders to a more secure chip technology which encrypts sensitive financial information.

This technology is called EMV technology.

The term “smart card” may be foreign to you, which is ironic considering most foreign countries use them and we are only just now, in 2015, beginning to use them here in the States. But what are smart cards?

Well, the idea behind smart cards is a simple one. They are “smarter” than your average piece of plastic. You know, the one with a magnetic stripe on the back and a few numbers and a name on the front.

Smart cards look almost identical to these traditional credit cards we have all been using for years, except for one small (but big) difference. Smart cards rely on a small microchip embedded in them to authorize and verify the credit account.

Without this little chip, they are just your average piece of plastic, vulnerable to criminal masterminds trying to steal the precious information it holds.

So, what is so different about chip cards (also called EMV credit cards) as opposed to magnetic stripe cards?

Man, you have great questions!

That little, tiny microchip (about the size of a SIM card) holds all the user’s information in its micro-circuits. And the best part is it keeps all the information much safer than magnetic stripe cards ever could.

Magnetic stripe cards are outdated at this point.

Why are they outdated? It’s not just because of your customers’ growing lack of trust in them these days.

It’s far too easy for the information on their magnetic stripe credit cards to be copied and used by fraudsters on a shopping spree. The magnetic stripe holds the user’s information, yes. But the information is static. In other words, it doesn’t change.

This means once the information is copied, it can be used over and over again on fraudulent purchases until the account holder realizes what is happening and cancels the card.

With EMV credit cards, the little microchip in them keeps information on a steady schedule of change. So the information is dynamic. Every time the user purchases something in a retail store or your place of business, it creates a unique code for the transaction.

The best part is the code cannot be reused by would-be criminals. All of the information stored on the smart card is encrypted. The direction this change to EMV is heading, the cards will eventually require a PIN number be entered in order for them to be used.

This PIN number is known only by the account holder, adding another level of security to the process. Because of the newness of this change, since retailers and other companies who accept credit cards are still becoming equipped to accept EMV credit cards, the new cards are still equipped with the magnetic stripe as a backup to the smart chip.

It won’t be very long though before we see a full transition to chip and PIN cards. This is the push happening right now and you’ll see a lot of your customers carrying and using these cards within the next few years.

EMV smart cards are not without problems and there are still some security concerns attached to their use. Primarily with online purchases. If your business has an online storefront, this is something for you to be aware of and ensure you are properly prepared for it.

Online purchases are different in the fact there is no actual face-to-face interaction between the user and the retailer. There is no card present for a clerk to verify its authenticity or if the user is actually the account holder. No PIN entered, no card placed in a smart card reader, no signature, no swipe. Just a name, card number, security code on the card, and expiration date.

Anyone can enter the information. If the card was lost or stolen and it falls into the wrong hands, it could potentially be used by not-so-honest people.

The financial institutions are developing a way to combat this security risk, but for now, just know while EMV smart cards are a major step in the right direction, they aren’t perfect.

They have proven to reduce fraud in other countries though, and they will help greatly here in the States as well. This is the most important thing for all of us… EMV credit card users and the retailers and companies who accept them.

At this point, all businesses are required to be EMV compliant. Which means you as a business must be able to accept EMV technology payment. If you’re not compliant and someone fraudulently uses an EMV card in your place of business, you are liable for the amount.

So get compliant!

You’re welcome to call us here at RedFynn anytime at (888) 510-9871 and ask us anything about this industry and this change going on. Give us a shout!