Understanding the EMV vs Non-EMV Credit Card Processing Environment
EMV (Europay, Mastercard, and Visa) credit cards are the newest safeguard/standard against the possibility of fraud in a credit card processing environment in recent times. However, what is EMV, why does it exist and when is it used?
What is EMV?
With an increase in fraudulent charges across the United States, there became a need to implement protections for the individual credit card user as well as merchants who accept these credit cards, in order to prevent/reduce illegal charges. Card Associations (Visa, Mastercard etc…) have banded together to increase security during the utilization of credit cards. EMV credit cards, otherwise known as ‘chip cards’, provide this safeguard. They are more popular today than ever before.
Why does EMV exist?
The purpose of EMV is to prevent fraud in a card present environment (swiped transactions). Card identifying data, previously only stored on the magnetic strip on the back of a credit card became too easy to duplicate during fraudulent activity and the Card Associations needed to find a more secure method of transmitting that data.
When is EMV used?
It should be noted that ‘chip cards’ are not relevant unless they are being swiped/inserted into a terminal in a face to face, credit card purchase. Re-occurring transactions, payments made by phone and payments made via the internet are regularly common practices, however, there are currently no set standards to verify EMV, despite pilot projects integrating card screen code technology since 2008. According to one card association, the best practices for merchants who accept credit cards to reduce fraud and the instances of a chargeback in a MOTO (mail order/telephone order) environment are the following:
1) Only accept a credit card for payment from the authorized signor.
2) Request a copy of identification along with a copy (front and back) of the credit card being used.
3) Use a credit card authorization form.
4) Make sure the signatures on both the authorization form and back of the card are identical.
5) Only ship items to the billing address associated with the credit card.
6) In an environment where both swiped and MOTO transactions occur, set each payment method up with a different merchant number.
Unfortunately, in our society today, as safeguards and measures increase to combat fraud, the fraudsters still seem to find a way to manipulate the system. In fact, I, myself, had my brand new EMV credit card fall victim to fraud only weeks after I received it. Thankfully, my card issuing bank held me immune to the fraudulent transactions, although the merchant where my card was fraudulently used ended up having to assume the loss of goods.
Although no one is completely safe against illegal actions, utilizing an EMV credit card will help reduce that risk.
Joshua Kaston is the President of Clearwater Processing, a division of Clearwater Merchant Corp, a 25-year-old, family owned and operated credit card processing corporation with offices around the US. Having grown up in the industry and rising through the ranks of his family’s business, Josh offers a unique degree of industry knowledge/expertise and transparency in an otherwise tumultuous sector necessary for his clients to operate in business today.