EMV~ Will Busineses be forced into this new technology?
EMV stands for Europay, MasterCard and Visa. This which is the new “chip card” technology used with credit card terminals and ATMs to authenticate credit and debit card transactions and which adjoins with the magnetic stripe on cards with an embedded chip.
It is a joint effort between Europay, Mastercard and Visa to ensure security and global interoperability allowing Visa and MasterCard cards to continue being accepted everywhere. Card systems based on EMV are being introduced across the world under names such as “IC Credit”, “Chip” and “PIN”.
The problem: Banks say there is not enough demand in the United States to offset the cost involved to make the change.
The debate goes back and forth between the card issuers and the merchants. Many merchants say they don’t want to invest in the new technology if banks won’t issue the cards. The banks, meanwhile, say they don’t want to invest in the cards because newer technology, such as mobile-device payments, will bypass the need for the chip-enabled cards thus making them obsolete.
According to the “Wall Street Journal”, Visa’s answer is to entice the merchants to buy new EMV terminals by eliminating the required annual fraud security compliance validation which verifies they are protected. Merchants have long complained about the program, saying that it is confusing and doesn’t effectively prevent fraud. Beginning Oct. 1, 2012 Visa will waive the annual compliance if at least 75% of Visa transactions come from a chip-enabled terminal.
Furthermore, starting in 2015, merchants who don’t have the new technology could be responsible for the costs of any fraud which stems from a transaction where a chip-enabled card is presented but cannot be used. Currently, the issuing bank bears such costs.
The Aite Group has reported the new technology would cut the $8.6 billion card fraud losses, which banks and retailers currently face each year with the magnetic strip technology, by 30 percent. This may sound like a lot of money, but is it enough to pay for the installation of all those new terminals? Mercator Advisory Group says card issuers will need to invest $2.8 billion and merchants will need to spend $2.6 billion (approximately overall, not per merchant) to install the necessary equipment.
If you would like to know more about this new technology to help you make an informed decision about to prepare for it, visit us at www.transactcc.com or call us at 1-800-335-6717 x 101