American consumers need to get ready as a new type of credit card is on its way to their shores. The EMV card (which stands for Europay, Mastercard, and Visa) has been in use in Europe for some time and is due to be phased in to the United States within the next few years. An EMV card appears to be a standard credit card, with one major exception. Itincludes a 3 by 5 mm microchip embedded into it which will make some significant differences when it comes to how the card is read and verified.
- The Chip-Enabled Point-of-Sale—The first major difference a customer will notice is the point-of-sale. When taking a purchase to the cash-register which is enabled with the chip-enabled technology, the card will either be inserted into the credit card machine and left there for the remainder of the transaction, or tapped against the machine to “scan” the card. There will no longer be the need to scan the magnetic stripe on the back of the credit card.
- Customer Verification—Currently, standard credit cards are verified using the customer signature. Some stores go the further step for security by also asking for a picture ID. With the EMV card, the verification step is provided by the use of a PIN which is entered at the point-of-sale. No further verification is needed since only the card holder will be aware of the card’s unique PIN.
- Fraud Prevention—The EMV card is being implemented as a way of staying one step ahead of criminals who have found ways to scam customers and businesses by copying magnetic stripe credit cards. Under current business practices, if a card is used fraudulently, the customer can contact his or her card company and they will waive the purchases. Once EMV cards become standard, the onus will fall to the customer to prove the fraud or to prove that they did not make the purchase. If they cannot, then the customer will still be responsible for the purchases.
Now that American Express has signed on to the EMV system, the way has been paved for all of the major credit card companies to introduce this system in the United States. Check out our next post where we will look at what this will mean more specifically for merchants who will need to make the switch over with software and hardware as well as training to make the change a success.