As most are probably aware, October 01, 2015 will be the start date for a new set of regulations concerning EMV chip credit and debit cards. There is a lot of information and misinformation floating around, much of it being spun by credit card companies using scare tactics to get merchants to switch to their services. In an effort to combat that misinformation, We've prepared a short but comprehensive breakdown of what all this EMV talk is really about:
1. What is EMV?
EMV is a set of specifications defining how smart payment cards and the devices that accept them are configured. Typical thought of as "chip cards" because of the visibly embedded microchip in the credit and debit cards, these cards and the devices that accept them communicate back and forth several times during a transaction, allowing for a very strong encryption that is the gold standard for payment card processing security throughout the world.
2. Who is mandating the switch to EMV?
The Payment Network - made up of VISA, MasterCard, and EuroPay - is the organization mandating this switch to EMV across the globe to enhance payment card security. Most countries in the world have already switched and are processing the vast majority of their transactions via EMV - the US is one of the last countries to make the switch.
3. What happens on October 1st, 2015?
On October 1st, liability for the processing of fraudulently produced credit or debit cards switches from the payment card processor to the non-EMV supporting party. For merchants, such as pharmacies, this means that if a counterfeit EMV card is used in a store that doesn't support EMV transactions, that merchant is liable for any charges on that card. If a store does support EMV transactions and processes a fraudulent card, the issuer continues to assume liability for the charge. VISA has a very good further explanation of liability after October 1st on their website here.
4. Do I have to switch to an EMV ready device by October 1st?
Yes and no. For the sake of security and removing any liability to your pharmacy, switching is absolutely necessary. However, the when is relatively up to you. Magnetic stripe cards will still be around and functional for the next two to three years. You should do a risk assessment to decide what the chances are you'll try to process a fraudulent card in the first few months after the switch, and when the best time to switch will be. Large chain stores like Target and Best Buy will want to be ready on October 1st, because of their high profile and high cost of goods. Small independent stores who base most of their business on repeat customers are less likely to process a fraudulent card, especially at high charge.
5. What are the penalties for not switching to EMV by October 1st?
Other than the shift in liability, there are no penalties for not taking EMV cards. There will be no fines by your credit card processors or the government - it is not illegal to not take EMV cards. And, because cards currently being distributed have both EMV and a magnetic stripe, you'll be able to process cards via a magnetic strip for at least the next couple of years. Either way, your customers will not lose their ability to pay at your pharmacy.
6. What should I do before October 1st?
The number one thing to do is to not panic, or fall victim to predatory card processors using scare tactics to strong arm you into switching to their services. VIP is completely aware of all the changing rules, and we are preparing to roll out terminals that will meet all of the EMV requirements. Our current timeline is to begin testing with a few select stores in late June / early July, and to be ready to distribute EMV hardware starting in late July, well before the October 1st deadline. Until then, if you have any questions, please don't hesitate to call Kenton at VIP. We understand this is a confusing situation, but we are committed to making the transition as smooth and hassle-free as possible.