First, the “smart phone” was introduced. Next came the “smart television.” It was inevitable that the “smart card” would make its way into the marketplace.
Smart cards, commonly called EMVs (an acronym for Europay, MasterCard, and Visa), are already in use in Europe and other parts of the world. With an EMV, the magnetic strip that’s been used for decades on the back of credit and debit cards is replaced by a computer chip.
How EMVs Can Help Fight Fraud
Although they aren’t a cure-all, EMVs have been effective in combating fraud. Unlike cards with magnetic strips, the chip creates a unique transaction code whenever the card is used. If someone attempts to reuse the transaction number, access is denied.
For businesses, the switch to EMVs is about much more than keeping up with new technology. Currently, when fraud occurs – for example, a thief uses a credit card to make a purchase – the credit card company absorbs the costs.
Effective October 1, 2015, this liability generally shifts to the merchant. In other words, businesses of all sizes from retail chain outlets in the mall to Mom-and-Pop stores downtown can be on the hook for most fraudulent activities involving major credit cards, including MasterCard, Visa, Discover, and American Express.
Because of this change, you may want to prepare your business to transition to EMVs by installing terminals at every transaction point. For instance, if you own a restaurant with two cash registers, you need two EMV terminals for processing. The first wave of smart cards in the U.S. features both the computer chip and the magnetic strip to help you and your customers make the switch.