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What You Need Know Now About EMV Terminals

EMV Terminals can be complicated, especially if your business just started using EMVs at your POS. Review the Fresh Insights article for details on EMVs.

Over the past year or so, credit and debit card issuers in the United States have been replacing the up to 800 million magnetic stripe cards in circulation with new cards embedded with a microchip. And soon, your business could be held liable for fraudulent card transactions if you have not upgraded to new POS terminals that are capable of processing EMV chip-based credit cards.


“Card issuers and banks have been stressing the importance of upgrading terminals for more than a year now, and the October 2015 deadline for converting before the liability shift is almost here,” says Andrea Lawson, vice president, treasury management sales for Cadence Bank. “Businesses that haven’t upgraded to EMV-capable POS terminals yet should contact their bank and merchant card processor as soon as possible to schedule an upgrade.”


How EMV Terminals Work

Once you switch to new EMV terminals, you’ll see they operate a little differently than your old terminals. These terminals are capable of processing two different types of credit and debit card transactions:


1. Chip-and-PIN and Chip-and-Signature transactions — Instead of swiping their cards like they did with the old terminals, your customers will insert their EMV credit cards into a card reader — this is similar to how they insert cards into an ATM. They will insert their cards chip side up, and then leave them in the terminal while they follow the instructions on the screen to complete the transaction by either entering their PIN or signing their name. Then they can remove the card.

Issuers will decide whether their cards will be chip-and-PIN or chip-and-signature. Depending on the brand and type of card, either a PIN or a signature will be required. However, new EMV terminals are capable of processing both types of authorizations.


2. Near Field Communication (NFC) mobile wallet transactions — New EMV terminals that have downloaded the EMV/NFC software application will be capable of accepting mobile payments via Apple PayTM, Samsung PayTM and Google WalletTM. Customers will simply hold their smartphones near the NFC symbol on the terminal and follow the instructions on their screen to complete the transaction.


Important note: New EMV terminals also are capable of processing magnetic stripe cards. Experts say it could take a decade or longer for all the magnetic stripe cards in circulation in the U.S. to be replaced with chip-embedded EMV cards. In the meantime, POS terminals will be designed so they can read both types of cards.


Huge Potential Liabilities

The potential liability that results due to counterfeit card fraud could be enormous. In fact, a single instance of fraud could be enough to wipe out a small business. According to the card associations, whichever party (the merchant or the bank) causes a contact chip transaction to not occur will be financially liable for any resulting card-present counterfeit fraud losses.


“Therefore, if your business does not have the right POS equipment that can process EMV microchip-based card payments, and this results in fraud, your business will be financially liable for the fraud,” says Lawson.


It’s also important to note that EMV does not impact data security and PCI compliance, Lawson adds. “Merchants are still required to achieve and maintain PCI compliance, including completing an annual self-assessment questionnaire and quarterly external vulnerability scanning.”


Cadence Bank offers a Data Breach Security Program through TSYS® that’s designed to help merchants meet the potentially devastating expenses that could result from a breach of customers’ payment data. The program provides up to $100,000 in coverage per location for fines and penalties levied by the card associations, card replacement costs, the costs of a security assessment and post-breach service expenses.


Please contact a Cadence Bank treasury management representative to discuss upgrading to EMV-capable POS terminals if you haven’t done so yet, or for more details about the TSYS® Data Breach Security Program.

Learn more about EMV transition and your business' readiness in this Fresh Insights article.

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