Starting this month, merchants in the U.S. could be liable for credit card fraud if they don’t adopt EMV chip technology for credit card processing.
EMV stands for Europay, Mastercard and Visa, and it’s a global card payment standard. When credit cards have these chips, enabled terminals send one-time transaction details for payment. Even if intercepted, this data would never be useful again and credit card thieves would be stopped in their tracks.
In comparison, magnetic stripe cards are relatively easy to hack by “skimming” the data and using it to create fraudulent cards.
Some big businesses already have chip-enabled card readers, which work by “dipping” the card or inserting it into a slot to be read.
Most chip cards also have magnetic stripes, so customers can still use chip cards with magnetic terminals. If magnetic stripe information is stolen, however, the merchant will be liable for the charges. The merchant could also be liable in other situations, some involving online transactions. The new laws put the blame on the party with the least sophisticated technology, whether it’s the credit card issuer or the merchant. Rules vary by provider, however, so we urge businesses to learn how they will be affected.
New terminals can cost up to $1,000 or as little as a few hundred, according to an industry association.