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Are Your Point of Sale Terminals Ready for Chip Cards?

Chris Allen

Many businesses are looking to upgrade their point of sale terminals to accommodate EMV-enabled debit and credit cards in response to the October 2015 liability shift for certain fraud related chargebacks. The EMV liability shift holds businesses liable for certain kinds of fraud if they swipe the magnetic stripe on the back of an EMV-enabled chip card rather than processing the card with EMV-enabled chip card technology.

EMV-enabled cards store card data in an integrated circuit on the card's chip, whereas traditional cards store this data on the magnetic stripe, which can be easily copied by fraudsters. To process these cards with EMV, customers must insert them into a chip card reader or tap them to a contactless EMV terminal. During this process, a unique, one-time code is created to approve the transaction, which reduces the chance of fraud that can result from swiping a card.

Businesses can participate in reducing fraud and avoid high costs associated with certain fraud chargebacks by investing in EMV technology.

Point of sale terminals can keep merchants safe
With the right technology in place, businesses can reduce their fraud liability. Fortune wrote that of the 1.2 billion credit and debit cards in circulation in the U.S.,  nearly 70 percent will have EMV chips by the end of 2015 (1). As a result, merchants who do not already have EMV-enabled point of sale terminals should upgrade with urgency if they are not comfortable with being held liable for certain chargebacks.

Intuit created a step-by-step guide for small businesses to prepare their technology, which can be applied to businesses of all sizes(2). According to the guide, there are five crucial steps merchants should take:

1. Audit your hardware: Make a list (or ask your POS provider for one) of all the features of your current hardware so it is easier to compare when upgrading to a new POS terminal. Consider whether or not your existing hardware accepts mobile payments, and if you'd like your new technology to do so.

2. Discuss your EMV hardware options with your merchant acquirer, payment processor and independent software vendor: Intuit recommends working with your ISV if your business uses a heavily customized POS.

3. Purchase your new hardware: According to The Smart Card Alliance white paper "EMV Payments: Changes to the Point of Sale," point of sale terminals should accept all payment types to ensure compliance, including contact, contactless, near field communications and magnetic stripe (3). Additionally, merchants should consider adopting technology that accepts mobile payments as well as both PIN and signature options with chip cards.

4. Get your terminals level-three certified: Merchants who are currently using heavily customized point of sale terminals and want to integrate EMV acceptance can work with their payment processor to seek level-three certification for the application.

5. Train employees: Just like with any new technology, businesses must train their employees to use the upgraded point of sale terminals and ensure compliance.  EMV acceptance is slightly different than accepting traditional cards, so being prepared will help ease any confusion or problems customers may experience. 

1. http://fortune.com/2015/07/22/mastercard-security-chip-pin-emv/
2. http://quickbooks.intuit.com/r/emv-migration/step-by-step-guide-to-emv-migration-for-small-businesses
3. http://www.smartcardalliance.org/resources/media/scap13_preconference/05.pdf

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