What you should know about EMV credit cards

By the end of 2015, it is projected that 600 million people will have chip cards.

Deciding whether to invest in card-processing systems that accept credit and debit cards embedded with microchips – also known as EMV, or chip cards – is a hot topic in the retail food world these days.

EMV (which stands for Europay, MasterCard and Visa) is a global standard for cards equipped with computer chips and the technology used to authenticate chip-card transactions. In the wake of numerous large-scale data breaches and increasing rates of counterfeit card fraud, US card issuers are migrating to this new technology to protect consumers and reduce the costs of fraud.

For merchants including retail bakeries, the switch to EMV brings a need to add new in-store technology and internal processing systems, as well as comply with new liability rules.

Previously, when an in-store transaction was conducted using a counterfeit, stolen or otherwise compromised card, consumer losses from that transaction fall back on the payment processor or issuing bank. After an Oct. 1, 2015, deadline created by major U.S. credit card issuers MasterCard, Visa, Discover and American Express, the liability for card-present fraud will shift to whichever party is the least EMV-compliant in a fraudulent transaction.

Approximately 120 million EMV credit cards have been issued and that number is projected to reach nearly 600 million by the end of 2015, according to Smart Card Alliance estimates.

The National Restaurant Association offers a few tips for retailers.

There’s no legal or regulatory requirement for merchants to install EMV readers or take action by Oct. 1. The card brands have simply modified their contracts to penalize those merchants that chose not to implement the technology – and the penalties happen only if a merchant is defrauded through the use of counterfeit or stolen cards. It is a business decision that each company must make.

To evaluate your potential liability, look at how many, if any, of your chargebacks are due to the use of counterfeit or stolen cards. If the numbers are low, it may be hard to justify the cost of EMV-enabled terminals. Even if you experience fraud, the cost of the chargeback may be far less than the cost of installing a new EMV reader, or fleet of readers.

Here are some frequently asked questions to help merchants understand the changes.

The magnetic stripes on traditional credit and debit cards store contain unchanging data. Whoever accesses that data gains the sensitive card and cardholder information necessary to make purchases. That makes traditional cards prime targets for counterfeiters, who convert stolen card data to cash.

With EMV cards, shoppers no longer have to master a quick, fluid card swipe in the right direction. Chip cards are read in a different way. When an EMV card is dipped, data flows between the card chip and the issuing financial institution to verify the card's legitimacy and create the unique transaction data.

The United States is the last major market still using the magnetic-stripe card system, according to credit experts. Many European countries moved to EMV technology years ago to combat high fraud rates.

There's an app for that

As of October 2015, if a charge occurs with a fraudulent credit card through a swipe and sign POS system, the business will be held liable for that charge. As such, an updated POS system is necessary to avoid these charges – and that’s where FOAT comes in. Tursus Software has created Food on a Truck (FOAT), an app that brings easy-to-use tools and business protection in the wake of new credit card regulations to an owner’s fingertips.

The new app is exclusively available on the Clover POS (Point of sale) system which FOAT sells to food trucks not already using Clover. Clover uses dedicated hardware that was designed specifically as a POS system so it’s more rugged, reliable, and secure.