EMV & NFC: What Do I Need To Know?

Sunday, August 23, 2015
We have some exciting changes happening right now in the credit card processing industry.  Sometimes, however, the initial excitement and information related to new technologies and (in this case) new card types can be quite confusing!!  Here are some of the most common questions & answers related to both EMV and NFC so you can position yourself to make great, well informed decisions for your business!

EMV Questions & Answers

Q  “What is EMV?”
A   EMV is the current global standard for payment processing with credit and debit cards. It will soon become the standard in the United States as well. Currently, cardholder information is stored on a magnetic stripe on the back of the card. With EMV, that information, and more, is stored in a chip embedded in the front of the card.

Q  “How does EMV work?”
A   EMV is chip-based transaction processing that focuses on the security of point-of-sale(POS) transactions, with an end goal of reducing duplicate card fraud and enabling other cardholder validation methods. Rather than swiping a magnetic stripe card through the magnetic stripe reader, customers insert the card into the chip reader to enable the POS equipment to interact with the chip in the card.

Q  “Will I be able to accept EMV cards if I do not upgrade my equipment?”
A   Yes- in the USA, EMV cards will continue to be issued with the magnetic stripe on the back so your existing machine will be able to accept the cards.

Q  “Why are equipment upgrades suggested?”
A  Utilizing the most current EMV capable devices — with a chip slot — on the market today ensures that the merchant can enable EMV via a simple download once EMV-capable applications become available for all platforms. Merchants that purchase the most current technology will be able to add compatible peripheral devices with contactless functionality (see NFC information below) once they become available; this will put merchants in the position to fully achieve compliance and be ready for the future liability shift of October 2015.

Q  “Am I required to update equipment?”
A   While you are not required to update your equipment to accommodate the new EMV card types, your liability as a merchant will change and you can potentially put yourself at risk for footing more of the expenses related to credit card fraud, by not being able to accept the cards using EMV technology by October 2015.

NFC Questions & Answers

Q  "What is NFC?"

NFC or Near Field Communication is a set of close-range, low-power wireless communication standards that allow devices to establish radio communication with each other, by touching them together or by placing them close to each other, usually no more than 10 centimeters (4 inches).


Q  "How does NFC technology work for mobile contactless payments?"

 After launching the payment application on your phone, the phone is tapped on the credit card terminal and a connection is made using NFC. At this point, you may be asked to scan your finger or enter a passcode to approve the transaction. The transaction is then validated with a separate chip called the secure element (SE), which relays that authorization back to the NFC modem. From there, the payment finishes processing the same way it would in a traditional credit card swipe transaction.


Q   "Are NFC transactions secure?"
A  Fraudsters are always trying different ways to tap into sensitive data.  NFC technology has several layers of security, depending on the hardware.  When you link your NFC smartphone to your credit card, your data is actually stored in a tiny part of the hardware; like a little lock box within your phone.  In some cases this is the SIM card, but it could be elsewhere in the phone too.  In any case, the data is encrypted; increasing security.  In many cases, you have to key enter a PIN on the phone in order to make a payment.  If your NFC phone is lost or stolen, you can freeze your payment account by calling the service you use for mobile payments or visiting their website.  You can also call the credit card issuers directly and cancel your cards- just as you would if you lost your wallet.
Q  "How long will it take for all businesses to accept NFC payments"
A  Some industry experts and analysts say NFC is still “three to five years” away from being mainstream — the same thing many were saying, well, three to five years ago. It has gained traction in parts of Europe and Asia, especially in Japan, where the wireless carriers have collaborated to push the technology.  NFC proponents say a mandate requiring retailers to update their payment terminals by 2015 could help nudge the technology along. And NFC is expected to be in more and more phones. Since the iPhone 6 has the NFC technology- many industry experts believe NFC will catch on this time around! (See the 2007 MasterCard Elephant commercial)
There is no need to be panicked or in a massive hurry to update equipment for these two technologies.  A structured and planned approach will help you make the right decisions for your specific business.  Do not fall victim to the incessant calls from the army of phone solicitors who are doing a good job of scaring business owners into making hasty decisions.  Check with your financial institution or a trusted merchant services provider before making any changes!  The fraud liability shifts of 4th quarter 2015 (EMV related) and the immedidate 'cool factor' for NFC transactions certainly need to be considered however, you have plenty of time to make a well thought out decision that will serve the needs of your business.  

Cheri Perry 8/23/2015

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