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Get on board with strengthening theft preventive measures utilizing layered protection for cardholders via chip and PIN.

EMV Encryption vs. Magnetic Stripe Cards

For 30+ years, magnetic stripe cards or “magstripe cards” have offered convenience at the point of sale (POS) using a simple swipe to create immediate access to payment information. This technology, along with a photo ID verification, was the standard for what was once considered to be a secure face-to-face customer transaction. Today, customer POS options are tailored to fit an ever-changing lifestyle offering anything from online payment options to quick and easy payments using a mobile device. With consumers demand for new, more convenient payment options and the inherent risks that come with those options, increasing concerns around payment security have pushed credit card issuers and business owners alike to increase security measures at the point of sale while still maintaining customer convenience.

So what was the payment industry’s answer to these concerns? EMV, which stands for EuroPay, MasterCard and Visa, the organizations which developed the technology, offers a payment card with a microprocessor on board. It’s quickly become recognized as the global standard for fraud protection, offering superb security and convenience through:

• Replacing magstripe cards with those that use an encrypted chip to transmit information
• Requiring customer PIN entry with each point-of-sale purchase
• Providing easy payment interaction with “contactless payments” (e.g., NFC/Google Wallet), which allow customers to virtually wave their card or device to make a purchase
• Added authentication measures for card-not-present transactions (e.g., online payments)
• Avoiding customer cards from ever leaving their possession

Contact or Chip and PIN Transactions

Say goodbye to fake IDs, stolen payment information and forged payment cards that can create large security threats and added liability for business owners. With EMV contact or chip and PIN cards, POS transactions will now consist of customer-initiated payments that never require sensitive, stored payment information to leave the customer’s hand. By not only leaving payment cards in the customer’s possession at all times, but also transmitting payment information in a more secure manner, EMV chip and PIN cards far surpass their magstripe ancestors in all aspects of security.

The EMV transaction takes place in the following five steps:

• Embedded microprocessor connects with EMV-enabled POS device/terminal
• Securely stored information is temporarily accessed from the embedded chip
• The cardholder enters an unique PIN to further validate transaction
• The financial institution validates the customer’s PIN to complete the secure transaction

Contactless Transactions

Near-Field Communication (NFC), also known as Radio Frequency Identification, such as Android Pay, Samsung Pay and Apple Pay, currently make contactless or tap-and-go payments possible. When a business is properly equipped with a NFC-enabled POS device, taking this type of payment from a customer is not only secure, but also can keep things running smoothly and quickly during peak business hours. The close proximity between the device and customer’s card (or often times smartphone) allow wireless transmission of payment information to the business and a complete receipt to the customer in a matter of seconds.

Magstripe to EMV Conversion Proves Significant Reduction in Credit Card Fraud

In 2013, Discover Financial Services reported an amazing 80 percent reduction in credit card fraud for European transactions following the complete migration to EMV, while a 47 percent increase was reported in the magstripe-dominated United States. One of many clear indicators that the use of this technology is sure to ease fraud and the related fears that many business owners face.

With U.S. merchants working to quickly make the switch to both EMV contact and contactless payment acceptance, cost can often be an area of concern. But with many providers offering inexpensive EMV hardware upgrades, and the liability that businesses avoided by meeting the October 2015 deadline for EMV acceptance, it is becoming clear that the long-term benefits and savings far outweigh the initial cost to upgrade.

To learn more, contact Staples^® Merchant Services for a free assessment.