I thought I’d take a few minutes here and share what I consider the nuts and bolts of the issue for U.S. restaurant owners.
EMV in a Nutshell
There’s plenty of information out there about what EMV is, but I’ll give you the 10-second rundown here—maybe just a refresher for you. EMV is a standard for credit cards using embedded chips alongside of magnetic stripes for identification, verification and transaction management. In most countries (the U.S. will be a notable exception), credit cards are authenticated by a PIN instead of a signature (in the same way that debit cards are used). In a wide range of ways, EMV cards provide a much greater level of security and protection against counterfeit cards and fraudulent use.
The US is Now the Prime Target for Fraud
This liability shift has already happened almost everywhere now—except the States and, I’m told, Antarctica. That makes the more vulnerable U.S. credit card low hanging fruit for card and identity thieves and counterfeiters. It’s also the last big harvest for those criminals, and they’re out to get as much as they can from it. With fraud so hard to commit elsewhere, it’s only natural they’ll come to the US where the protections are weaker.
October 2015 Liability Shift
Of course, the issue on everyone’s minds is the looming October shift of liability. There’s a fair amount of confusion, but it’s really pretty simple. If you process a payment from an EMV card on a non EMV terminal (meaning a terminal that can read only magnetic stripes) and the payment turns out to be fraudulent, you’re responsible for payment. Creditcards.com says that by the end of the year, 70% of the cards in the U.S. will be EMV. (They also tell us that two years ago that number was a little over 15%.)
The Type of Card Used
The U.S. isn’t going to be using the same kind of cards as most of the world. The most commonly used technology—and in my opinion the stronger one—is Chip-and-Pin. It’s like a debit card, with a four-digit pin that you enter at the payment terminal. The alternative is Chip-and-Signature—very much the way stripe-only credit cards are processed today: the customer signs on the payment terminal screen. US issuers have chosen the latter in order to make adoption easier. Card-and-Signature is already very familiar to US consumers. Banks and other issuers believe that US consumers will balk at learning something new: forcing cardholders to enter a PIN will force that card to the back of the wallet. That works against you. Growing usage means more cards processed at your restaurant: if you’re using a stripe-only terminal your liability risk increases with every new card.
The Terminal
The good news is: all of this is very simple to deal with. Your only requirement is that you have EMV payment terminals in place. They’re not expensive. They’re not hard to install. And they’re all you need to keep the threat of liability off your back. They work differently than stripe-only terminals. Because the terminal is communicating with the chip throughout the transaction, the card stays in the terminal the entire time (instead of being swiped through the reader). But that’s easy to learn to do. It connects to Maitre'D the same way your current payment terminal does—as far as our POS is concerned, it’s just another payment terminal.
The Bottom Line
When you look into it a little more deeply, you’ll see that there are other benefits that issuers and banks offer you when you install EMV terminals. For instance, many of them won’t make you undergo annual PCI compliance audits. American Express offers a partial reimbursement of the cost of the terminals. And there are other similar incentives.
All of which make the investment in an EMV transition even more attractive: to you and to your customers.
