Large-scale security hacks, such as Target’s recent breach that affected around 70 million shoppers’, have customers and retailers across the U.S. concerned about the safety of using and accepting credit and debit cards.
That’s why, for top credit card companies MasterCard and Visa, October 2015 officially marks the end of the swipe-and-pay credit card system, at least for face-to-face transactions. The two credit card giants have set this deadline to switch over to the chip-and-PIN system (a part of the larger EMV system), which has been used in Europe for many years now. And, unlike previous promises by U.S. credit card companies, this one is set to stick.
An EMV (Europay, MasterCard and Visa) chip is more secure than the magnetic strip, due to the fact that it cannot be skimmed. It also employs tokenization, which replaces sensitive data with symbols that are much harder to hack.
Why hasn’t this system made its way to the U.S. sooner? In short, capital. Large merchants (including Target) have been vying for the EMV chip for years, but it would take an entirely new infrastructure to work and would completely derail the current POS (Point of Sale) system.
The switch would mean new, expensive chip readers, which run between $40- $100. This compares to a cost of about $20 for magnetic card readers .These costs aren’t stopping Target, however. In response to its recent large data hack, the company has promised it will invest $100 million of its own funds to put the new system in place.
As part of its switch to EMV, MasterCard has noted that there will be a “liability switch.” This change will mean that if there is an incidence of card fraud, whichever party has the lesser technology will be held responsible. In other words, if your company doesn’t switch to the new system, you may end up with the liability for a fraudulent situation instead of that amount being deflected to the credit card provider.
It’s worth noting EMV won’t solve all security issues. Though safety rates are certainly higher in Europe than here in the U.S., thieves will always find a way to make their presence known. This is especially true online, where there’s no significant difference in the swipe and chip cards.
What this means for your business is that you’ll be making an investment in the new technology that may be hard to stomach. Eventually, hackers will catch up, and even newer technology will be required. The EMV switch is one that simply must be made, however. And, though it may be hard to calculate ROI at the moment, you won’t want to be left behind in giving your customers the protections they need.
So, what’s an intelligent retailer to do? Start planning for the switch now. October 2015 is only 1.5 years away, and there’s a lot of work to do to transition your business to the new technology.