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Around the world, smart cards are bringing unprecedented security to consumers and businesses. Payment cards containing chips are more powerful than traditional magnetic stripe cards because they contain tiny computers that make transactions safer. Chip technology also reduces the incidence of fraud by making cards more difficult to counterfeit. |
Security Advantages for Merchants
When a cardholder makes a card-present purchase, the chip card is inserted into a Point-of-Sale (POS) terminal and remains there during the transaction. The chip communicates with the terminal to validate the cardholder’s identity and record important transaction information. Chip cardholders usually authenticate themselves with a Personal Identification Number (PIN), which is a safer means of authentication than a signature.
Chip transactions using a PIN provide additional security for lost or stolen cards. Businesses that use chip and PIN terminals are relieved of liability for the cost of card fraud as long as cashiers follow the directions indicated in terminal prompts and use routine security practices.
As chip cards become more widely used, they will increasingly replace cash, reducing the need to handle and store currency. Chip cards also minimise the potential for errors and losses by eliminating the need for paper reconciliation – transaction records are entirely electronic.
What does EMV mean?
EMV is an international standard developed to maximize payment security by replacing magnetic stripes by chips on both debit (bank passes) and credit cards. EMV stands for the abbreviations of the initiators of the standard: Europay, MasterCard and Visa. The EMV standard is also supported by other card schemes (such as AMEX or JCB).
Why was EMV developed?
The most important reason for the EMV roll out is fraud protection. Data contained in chips are fully protected, making the chance of fraud close to impossible. The chip technology avoids magnetic stripe data being copied and enables extra controls carried out during authorization requests. In many European countries the EMV roll out has already been completed. In the Netherlands, EMV chip credit cards have been issued since 2005 and chip bank passes will commence being issued later in 2007. By the end of 2008, 95% of all Dutch MasterCard and Visa cards will have been replaced with EMV chip cards.
How does the process of EMV chip card acceptance work?
In order to accept an EMV card, the card should always be dipped in the EMV compliant card terminal, in the same way you would insert a card into a cash machine, and no longer swiped like in the current Pinpayments process. The terminal will read the chip on the card and request a Pinnumber. Your customer will then be able to key his Pinnumber on the terminal for the transaction to be authorized. A signature from your customers will not be necessary anymore.
What does it mean for you as a merchant?
As a result of the EMV roll out, the liability for card fraud moves to the party that is not EMV compliant. In other words, if the card presented for payment has an EMV chip and your payment terminal does not support the reading of EMV chip cards, then according to MasterCard and Visa international rules, you may be liable, but only of course if the cardholder actually disputes the transaction. These rules with regards to liability for fraud have applied in Europe since January 1st 2005. If you are fully equipped with an EMV enabled terminal and follow the appropriate instructions for card acceptance, you will not be liable for fraudulent transactions. If you are not equipped with an EMV enabled terminal, you are liable for losses or chargeback that result from disputed transactions.
There are currently three possible card acceptance scenarios:
Situation 1
An EMV chip card and no EMV terminal: the Merchant is liable for any fraud losses.
Situation 2
No EMV chip card and EMV terminal: the card issuer is liable for any fraud losses.
Situation 3
EMV chip card and EMV terminal: the card issuer is liable for any fraud losses.
When should you upgrade your terminal(s) or buy EMV compliant terminal(s)?
In principle, the investment in an upgrade of current terminals or the investment in an EMV compliant terminal should take place at the end of the terminals’ life span. However, we strongly advise our customers to equip themselves with EMV compliant terminals as soon as possible to avoid any fraud losses and chargeback risks. Please note that you might already have an EMV ready terminal. However, to become EMV compliant, your terminal needs to be activated. Please contact your terminal provider to find out if you need to upgrade or invest in a new terminal and how to activate your EMV ready terminal.
How to choose an EMV compliant terminal?
Different brands of EMV ready terminals are currently available on the Dutch market. For more information about EMV ready terminals, you can visit: www.betaalterminal.nl or contact your current terminal provider.
What if you choose not to upgrade your terminal? Can you still accept credit cards or foreign Maestro Cards?
Yes, you can still accept credit cards or foreign Maestro cards with an EMV chip, and those that do not have an EMV chip with your non EMV compliant terminal. However in case of disputed transactions, you will be liable for losses.
Please note that many types of fraudulent transactions can be avoided by following simple practices such as:
- Asking your customers to present an identification document such as a passport and check that the name and signature on the identification document matches the name and signature on the card.
- Verify that the number on the card of your customer is the same as the card number on your printed receipt.
- In case of doubt, please call our Authorization department stating that you want a “ code 10” authorization. Best practices on how to accept credit card and international Maestro cards safely and how to recognize a fraudulent transaction can be found on this website: www.vanstripnaarchip.nl
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European Merchant Services
Office address:
Wisselwerking 58
1112 XS Diemen
the Netherlands
Postal address:
PO Box 22764
1100 DG Diemen
Delivery address:
Diemerhof 48
1112 XW Diemen
Tel: 0800 - EMSCARD
Tel: 0800 - 3672273
E-mail to EMS card |
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