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7 Things Business Owners Need to Know About EMV Terminals

New credit cards that add a security chip to the traditional magnetic strip are being distributed to customers before October 1 to help cut down on fraud. Many small businesses are not ready for the change and do not know what the change means for them.  Here are 7 things business owners should know about this change and how it can affect them.

1-What is EMV?

Euro MasterCard Visa Chip Cards known as EMV work in conjunction with EMV logic in the merchant terminals and card readers.  This dual process will thwart fraud by preventing the reproduction of cards from stolen data.  Chip cards better protect account information from fraud by generating single use transactions. 

2-How does having an EMV terminal benefit business owners?

Effective October 1, there will be a liability shift.  Currently when card-present fraud occurs, it is the liability of the financial institution to make reparations to the consumer.  After October 1, any merchant that fails to process an EMV chip card without reading the chip via an EMV terminal/reader will then carry the liability, should fraud occur for card present transactions.

3-Am I required to get an EMV enabled terminal?
Currently businesses are not required to implement an EMV enabled terminal.  Many small businesses do not see an immediate need as they may not be seeing many EMV chip cards, yet.  However, most financial institutions have planned to distribute new chip cards to all customers before the end of 2015.  Many major retailers already have EMV terminals in place and smaller businesses may not feel the need to invest in new equipment under the presumption that they will not have any issues with fraud.  However, fraudsters who usually target larger retailers could be deterred with new EMV terminals in use and will transition their target to smaller businesses without EMV terminals, leaving the business fully liable.

4-Does my EMV terminal also support mobile wallets like Apple Pay or Contact-less credi t cards?

Some EMV terminals only accept traditional cards and EMV Chip Enabled Cards.  However, there are some that accept all forms of payment, including mobile wallets and contactless cards.  All new Avidia Bank Credit Card Terminals are able to accept all forms of payment from EMV Chip Enabled Cards, traditional cards and mobile wallet/contactless cards.

5-How do I use an EMV terminal?

Unlike current credit card terminals that require a quick swipe of the mag stripe, EMV terminals are much different.  EMV cards must be inserted in the machine at the bottom, stripe side facing down, chip first.  The EMV card must then be left in the terminal for the duration of the transaction as it takes a few moments to communicate.  Then, the customer must sign or enter their pin, wait for the transaction to be completed and remove the card.

6-Will the EMV terminal be compatible with my POS software or register?

Your EMV terminal can be tailor fit to your POS system or register.  However, you may want check with your POS or register provider just to be sure.  The path to EMV compliance is different for every business, depending on the POS system in place. You may need to update your system’s hardware, software or both, or simply replace the card terminal.

Also, it’s worth noting if you currently process transactions through an analog telephone line, you may want to upgrade your processing method to an Ethernet phone line.   This will ensure faster transaction times and will eliminate the potential of your transaction timing out. 

7-Are there special things I should know regarding adding a tip on for employees?  
If you own a restaurant, salon, service center and allow customers to tip employees, there are special considerations for how transactions using EMV cards must be completed.

For example, currently, when you go to a restaurant, you receive your bill at the end of the meal.  Typically you give your bill to your server with a credit card.  The server swipes the card for the initial amount (prior to tip) and provides you with a receipt for you to add a tip and sign.  The tip adjustment is processed sometime later that day without the card present.  Now, with EMV cards, the “entire” transaction has to be completed prior to removing the card from the terminal.  So an adjustment for a tip at a later time is not currently considered EMV compliant, by all of the card brands.  Going forward you’ll need to be doing this in reverse, by initially providing the receipt to the customer with a line for them to fill in the tip amount.   Then you are processing just one transaction by charging the card for the “total” amount (this would include tip) thus the card is present and inserted for the duration of the transaction as no tip adjustment is needed.   

Check with your POS or Register provider to create a solution that works for you and don’t forget to train all your employees on how to use the EMV terminals. 

Published by Avidia Bank NMLS# 422902
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Disclaimer - All content contained in this newsletter is for informational purposes only and should not be relied upon to make any financial, accounting, tax, legal or other related decisions Each person must consider his or her objectives, risk tolerances and level of comfort when making financial decisions and should consult a competent professional advisor prior to making any such decisions. Any opinions expressed through the content in this newsletter are the opinions of the particular author only.

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