EMV Chip Credit Cards: What You Need to Know
Members: Make sure to read this explanation by Jennifer Nieto of Best Card about how new EMV chips on credit cards will affect your practice, so that you are prepared to handle this new change in the payment process.
To panic or not to panic? That is the question.
You may have heard that credit cards were all to contain an encrypted chip in addition to a magnetic swipe stripe by October 2015. This is a new rule to heighten security on credit card purchases and to prevent fraud. If your office processes credit cards, you will need a terminal that has EMV (Europay, Mastercard and Visa) chip-reading ability for credit card processing. If your office doesn’t have a terminal with this enhancement yet, there is no need to panic; however, you should start looking into a new terminal to avoid liability should a fraudulent card be presented at your office.
Here are the facts.
It is not a law to have EMV chip-reading equipment, nor is it a Payment Card Industry (PCI) mandate. There is no fine and you will not pay higher rates if you do not have the equipment. In fact, any new terminal (or old terminal for that matter) will still read magnetic stripes and credit cards will carry magnetic stripes.
So why bother making a change?
While EMV is not a mandate, this technology is important for your practice to avoid a financial hardship due to the liability of processing a fraudulent card at your office. If a patient presents a stolen or counterfeit card at your office that contains a chip, and you swipe the magnetic stripe instead of using a chip reader, you will have no recourse when the charge is proven invalid and will lose any related chargeback.
Up until October 2015, if a fraudulent card were swiped at your office, the dispute would have followed standard chargeback protocols. This means that you would have had a chance to prove that your staff performed due diligence. You would have been given approximately 30 days to respond to the dispute with proof that your signed receipt has the same name and signature as that on the presented card. This continues to be the case for cards that do not have EMV chips in them after Oct. 1, as well as for any keyed transactions.
While there is a low incidence of fraudulent cards at dental practices, it is an important liability protection for your practice to purchase equipment to meet these new rules. The WSDA endorses Best Card for credit card processing. Best Card dental practices get a one-time $100 discount on EMV equipment – so you can own EMV and contactless (Apple Pay, Google Wallet, DroidPay for smart phones) equipment for as little as $159.
What does your staff need to know?
To minimize liability to the practice there are some important things you should cover in staff training.
- With any face-to-face transaction, it is important that staff match the name on the card with the person presenting it. In addition, they should be sure the signature matches the name on the card.
- When keying in a credit card, it is important to input the three-digit CVV code (4-digit for Amex), as well as the address and zip code of the cardholder’s account. If all three of these key identifiers match, the practice would most likely win a chargeback should it arise.
- EMV-compliant transactions require customers to insert the card in the reader and leave it there until the transaction is complete. Make sure that your new equipment is PIN-enabled in case the issuer of the EMV card requires a 4-digit code (even for credit transactions).
What is EMV?
In the wake of numerous large-scale data breaches and increasing rates of counterfeit card fraud, U.S. card issuers are migrating to this new technology to protect consumers and reduce the high cost of fraud that they incur. EMV-chip cards are designed to decrease credit card counterfeiting by making them more difficult to copy. Unlike magnetic-stripe cards, which store unchanging data in their stripes, EMV-chip cards generate a new code for every transaction. Cardholders also have to verify their EMV card purchases with either a signature or by entering a PIN (however, the new EMV cards will still have the magnetic stripes on them for quite some time).
It is important to note the technology involved is expensive to both the manufacturers of equipment and the card-issuing banks. As a result, the transition is moving slowly:
• 13%: MC/Visa/Discover/AMEX cardholders with an EMV chip as of July 2015.
• 35%: Individuals who have actually used the chip encrypted cards as intended.
• 70%: Estimated percentage of U.S. credit cards that will be issued as EMV cards by the end of 2015.
• 40%: Estimated percentage of U.S. debit cards that will be issued as EMV cards by the end of 2015.
• 7%: ATMs in the U.S. that can read EMV-chip cards as of July 2015.
• $500: Average cost of an EMV compliant point-of-sale terminal.
Jennifer Nieto is president of RJ Card Processing Inc. (d/b/a Best Card), the WSDA’s endorsed credit card processor. She is a former CPA and director of finance for the Colorado Dental Association, as well as a former FDIC Bank Examiner. Best Card is currently endorsed by more than 20 dental and medical associations or their affiliates due to their excellent rates (the average dental practice saves 22% or $1,480 annually in processing fees) and personalized customer service. Contact them to learn more at 877-739-3952 or visit bestcardteam.com.