Chip and PIN credit cards coming

February 18, 2014 Timothy Uncategorized

Did you know Visa and MasterCard have set a deadline of October 2015 for when all banks and merchants must use chip and PIN (EMV standard) credit cards? Europe has already switched and India has set June 2014 as their target date for switching over to chip and PIN.

Compared to magnetic stripe credit cards, the new chip and PIN credit cards are more secure. Sure, one can clone the software on the chip, but the use of an unclonable PIN number ensures that’s a useless activity. We’ll remind you how to choose a secure PIN closer to the switch in case your bank doesn’t assign you one.

What does this mean for small merchants?

First, you’re going to need new hardware and software to physically process a chip and PIN credit card. During the transition period many cards will likely have a magnetic stripe as well as the new chip.

Second, you’ll receive protection from financial liability for card-present counterfeit fraud losses. Known as as Counterfeit Card Liability Shift, Visa and MasterCard will both shift liability on Oct. 1, 2015. Of course, to shift liability from the merchant to the bank, you’ll need to have the new hardware, software, and protocols in place.

Third, you the merchant will gain new capabilities for loyalty programs and customer analytics. Expect your merchant service to start pushing you to buy these new services as part of the transition.

What’s the downside?

Online fraud will likely increase. Since criminals will no longer be able to commit fraud at a physical point of sale, they’ll likely target online sales points. England saw a jump from 23% to 65% in the percentage of online fraud. Be ready if you sell online.

Source: Smart Card Alliance

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About Timothy Lee

Tim, the Arkansas Small Business and Technology Development Center's webmaster and technical training specialist, has been with ASBTDC since 1995. He retired from the U.S. Air Force with the rank of master sergeant. He's a bit gung-ho, turns cat food cans into cook stoves, and keeps packing ASBTDC equipment for rapid worldwide deployment, but he's your "go to" guy for technical solutions and full-scale disasters.

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