5 Questions About EMV Credit Cards and Your Dealership
- Microprocessor chips will make credit card transactions more secure.
- Be ready to accept EMV credit cards by October 1, 2015.
By now you’ve heard of EMV chips. If you’ve gotten a new credit or debit card lately, it’s likely you already have one in your wallet.
EMV is named for the developers of the new cards: Europay, MasterCard, and Visa. The U.S. is one of the last countries to adopt the technology, which has been standard in Europe and Asia for several years.
Here are 5 facts you need to know about the new cards, and how they will affect your business:
1. How are EMV cards more secure?
EMV credit and debit cards work through a small microprocessor chip embedded in the credit or debit card.
They are more secure because the microprocessor works differently than the magnetic strip. The data in a magnetic strip never changes. If counterfeiters capture the data from a magnetic strip, they can easily create a copy and use it as if it were the original.
The chipped cards, however, create slightly different data every time they are used. The data is “dynamic,” changing with every transaction, making counterfeiting a much more difficult task.
The other difference is that you won’t “swipe” the EMV cards. Instead you’ll “dip” them—inserting them into the credit card machine and then leaving them there until the transaction is complete.
2. Will “swipe” cards still work?
Yes, because cards will have both a traditional magnetic strip and an EMV chip for some time to come.
As a vendor, your credit and debit card hardware and setup will determine whether a customer pays with the EMV chip or by a traditional swipe of the card.
In other words, you get to decide how credit and debit transactions are made in your store—either with the more-secure EMV method, or by the less-secure magnetic strip method.
3. Is there a deadline for when I need to start accepting EMV cards?
Visa, MasterCard, Discover, and American Express have set October 1, 2015, as the deadline for when you need to be accepting EMV cards in the U.S.
We do not expect that every bank that issues credit and debit cards will replace its existing cards prior to the deadline.
Your “swipe” card machines will still work after the deadline. But there’s one really good reason to upgrade before then.
4. What happens if I don’t upgrade my system to accept EMV cards?
You might expose yourself to fraudulent charges in your store.
Today, if someone pays for a $500 RO with a counterfeit credit card, most banks will absorb the cost of the fraudulent purchase. They won’t charge the customer, but you’ll still receive payment for the service performed.
After October 1, 2015, that liability could shift to you.
For example, if a counterfeit card gets used at your store, and the bank that issued the original card is fully EMV compliant, the liability for the fraudulent charge would most likely fall to you.
5. Do EMV cards affect online or over-the-phone payments?
EMV technology will not affect online or over-the-phone payments.
Bottom line: be prepared to accept EMV transactions in your dealership by October 1, 2015.
And while you’re at it, use this transition as an opportunity to look at how payments are made, processed, and tracked across your dealership.
For example, very soon, customers will be able to pay for most purchases at your dealership online, instead of having to come into your store.
Automotive News recently published an article discussing why dealerships are sourcing lower-grade used vehicles to fill their lots.