For the last few years, merchants across the United States have been reading, listening to and receiving warnings about the eventual liability shift that is coming in October.  There is an incredible supply of information about what merchants will need to do to update their systems, incorporate EMV-ready equipment, and what they can do in general to avoid being liable for fraudulent purchases.  With that in mind, here are three of the most Frequently Asked Questions that R Magazine has put together for you to use as we move quickly towards the October deadline.

Q:  I never see any “chip” cards when I process payments.  Do I really need to switch to a Chip and Signature or Chip and PIN card reader?

A:  Merchants might not be currently seeing a lot of Chip and Signature or Chip and PIN cards right now. However, approximately 120 million Americans have already received an EMV chip card and that number is projected to reach nearly 600 million by the end of 2015, according to Smart Card Alliance estimates.  It should be noted that credit/debit card companies are currently issuing cards that have both a chip and a magnetic strip, to avoid inconveniencing both the consumer and the merchant, however it is anticipated that by 2018 mag stripe technology will be on it’s way out the door.

Q: Is this new type of card really more secure than one with only magnetic stripe?

credit-card-scannerA:  Yes, it is.  The chip in these new EMV-style cards has encrypted data about both the customer and the transaction, making it much more secure due to the fact that it is very difficult for anyone to make counterfeit copies of these types of cards.  For example, if a hacker decides to steal information on a transaction from a specific pin and chip card, the typical card duplication that thieves could use with a mag stripe card would never work.  This is because with these new cards, the transaction information is specific to that sale and that sale only.  Each time a purchase is made, a new transaction ID is formed.

Q: Why is this change happening now?

Q:  The credit and banking industries have tried to get this up and running for a long time, however the issue that stops this movement from really taking off has always been cost.  It costs the banks a lot of money to issue new cards to all of their customers that have chips instead of mag swipes, and it costs a lot of money to upgrade their systems to accept this technology too.  There are two reasons why this is happening now. First off, in the wake of the large-scale card data breaches faced by multiple corporations in 2014, it became clear that a change was needed.  In addition, the change is happening because the banks and credit card companies are shifting the liability for fraudulent purchases on to the merchants, as of the October 1 deadline.  No, that is not a mistake.  If a merchant does not have an EMV-capable system in place by October 1, they are now liable for any and all fraudulent credit/debit card purchases made with a mag swipe card.