The credit industry is about to undergo a sea change when it comes to credit card acceptance – in the not too distant future, credit card terminals of all kinds will need to significantly increase their security functionality. Terminals, mobile devices, pin pads and short-wave wireless devices are preparing to integrate EMV chip technology. Every merchant that accepts credit cards will ultimately need to upgrade their hardware and software to meet these changes or face a significant increase in the rates they are charged for credit card acceptance.
EMV technology is a joint effort by Europay, Mastercard and Visa to standardize the way in which payment processing is conducted around globe. While most countries have already made the migration, the United States has been a slow moving giant. EMV will ultimately replace the magnetic stripes on all credit and debit cards, by inserting an electronic chip to ensure transactions are conducted using cryptography and digital signatures.
The migration to EMV technology in the United States is taking place primarily for two reasons: First, the use of magnetic stripe cards has traditionally engendered significant fraud. The more merchants move towards contactless or mobile processing, the increased need for security. And secondly, US credit cards are increasingly not accepted abroad – devices that accept EMV technology do not have the ability to read magnetic stripe cards – necessitating a change in the way we do business.
The industry has been making significant strides in regards to EMV since 2012. In October of that year, there was PCI audit relief given to merchants that processed at least 75% of their transaction on an EMV device. In April of 2013, all credit card processors were required to support merchants that accept EMV transactions. Additionally, Visa and Mastercard have informed the industry that merchants that do not adopt EMV terminals by October 2015 will face increased rates to penalize those hindering the implementation of EMV technology. Ofcourse, as we get closer to this date, like all deadlines it might get pushed further back.
Exactly how the implementation will look and the exact timing remains unclear. But one thing is certain, EMV bank card processing is on its way and will impact every merchant accepting credit cards.