Don't Even Think Of An EMV Terminal Until You've Seen This First!

First of all I'd like to suggest you stop using credit card terminals altogether - and this is a perfect time to get rid of them ... but more on that below. First, let's answer this question -

What is EMV?

"EMV" is an acronym which identifies the names of the card brands - Europay, Mastercard, and Visa, who co-developed specifications to be used to process "chip-based" credit cards (a.k.a. "smart cards"). These are cards which have a processing chip embedded in them, and are meant to make credit and debit card transactions more secure, thereby reducing or eliminating fraud.

EMV specifications are managed and maintained by a company called, "EMVCo".

"The EMVCo members are American Express, Discover, JCB, MasterCard, UnionPay and Visa. Each of these organizations owns an equal share of EMVCo and has representatives in the organisation at the management and working group levels. All decisions are made on a consensus basis among the member organisations." - taken from EMVCo's website at http://emvco.com

What are EMV-Ready terminals (and why should you care)?

EMV terminals are credit card terminals which are equipped with a small intergrated circuit to read the embedded processing chip in an EMV Credit Card.

Why should you care?

It depends.

The main reason why a merchant needs to upgrade to an EMV terminal is because credit card issuing banks are planning to flood the U.S. market with credit cards with a processing chip embedded on the card (a.k.a. "smart cards"). Over 600,000,000 of these cards are expected to be issued in 2015 alone. The reason most commonly given for the switch is for security purposes. Credit cards with the magnetic stripe on the back are too easy for counterfeiters to duplicate. Cards with an embedded chip are claimed to be "counterfeit proof", so the banks profess they are protected from fraud by issuing these more secure cards.

This is why from Oct 1, 2015 forward, banks will no longer accept liability for credit card fraud on any transaction where a counterfeit smart card is used, and the merchant doesn't have an EMV compliant terminal. The banks rationele is "we took care of the problem by issuing secure cards, so you (the merchant) have the responsibility of using a terminal designed to read them ... therefore, if you don't use an EMV compliant terminal the liability is yours."

EMV Terminal Hype and Myths

As a car dealer you no doubt have no shortage of salespeople who would love to earn your credit card processing business (o.k., add yours truly)

Unfortunately there are also many opportunistic salespeople who are more than happy to exploit the situation (see dollar signs $$$) - as a result hype and misinformation abound. Here are 3 common myths and outright lies that are being told about the October 1 deadline:

1.) By law you have to have an EMV compatible credit card terminal by Oct 1, 2015

Wrong. There is no law that says a merchant has to purchase and use EMV ready terminals. However, there is a liability risk that will be transferred from the card issuing bank to the merchant on counterfeit smart cards processed where a merchant didn't have an EMV capable terminal starting Oct 1, 2015

2.) Once Oct 1st comes around your business won't be able to accept any of the 600,000,000 smart cards issued if you don't have an EMV compliant terminal

Wrong. The new cards will still have the magnetic stripes on the back which can be read by a regular, non EMV-compliant terminal

3.) The new EMV cards and EMV-ready terminals will prevent fraud

Wrong. While there is a reduction in fraud with the EMV chip cards in the countries which have already made the transition, "card not present" fraud increased. This happens when a thief obtains someones card information, then uses it online or over the phone for a fraudulent transation.

How Do You Decide Whether Or Not You Need A New EMV-Ready Credit Card Terminal?

As in investing, so in business. Each merchant is different.

If fraud - specifically counterfeiting - is a risk you're not comfortable with - it may not be a bad thing to go ahead and invest the $300 or so (estimate) you'd spend for a new, EMV-compatible terminal. You could look at it as a one time "insurance premium" and be done with it. Just know the only fraud this is protecting you from is counterfeiting. The issue is over the acceptance of a counterfeit card which contains a chip, and whether it was processed using a compliant or non-compliant termial.

On the other hand, if you're a business owner who only deals with people or other businesses you know and trust, or if your risk tolerance is high, you may not feel as if you need it.

Also, the industry you're in matters. Some industries conduct transactions which require a great deal of paperwork, personal information, and credit checks in order to complete the transaction. It's hard to imagine someone attempting to use a counterfeit card in these kinds of situations - but who knows? Given a high enough ticket some thief might relish the challenge to see if they're able to pull it off.

The bottom line is to weigh your options, the type of industry you're in, and your tolerance for risk, and then make your decision.

A Good Time To Ditch Your Credit Card Terminals Altogether and Use Alternatives

Then on the other hand, as a pc-based processing advocate, I would argue it's the perfect time to stop using credit card terminals altogether and process using your computer instead. While the risk/reward decisions regarding EMV cards still apply, there are simply too many other benefits to ignore - one of which is no longer having to worry about PCI Audits and Fees. Our merchants love our secure, no paper trail processing.

To see a short video with some the features and benefits of paperless processing visit here. You may decide while dealing with the EMV compliance issue that you're also ready to do away with PCI audits and fees!

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