Preparing for the Transition to EMV Chip Cards Next Fall

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The U.S. credit card industry is in the midst of transitioning to a technology system called EMV — named for its developers, Europay, MasterCard, and Visa — in order to combat ever-increasing reports of fraud. By October 2015, retailers must be equipped with new, EMV-certified card terminals at their points of sale or potentially be held liable for fraudulent purchases.

The EMV system, common in Europe, Canada, and Mexico, ensures more secure purchasing methods as the microprocessor chips used in EMV cards — also called smart cards, integrated circuit cards, or chip-and-pin cards — store data uniquely after every transaction, unlike the traditional magnetic stripe used on credit cards.

The American Booksellers Association’s affiliate credit card processor, Bancard Systems, is calling participating stores to ensure booksellers are ready to migrate to the EMV system, said Vice President Jeffrey Gallo, especially in terms of acquiring the proper equipment.

Booksellers with standalone point-of-sale systems can upgrade now to an EMV-certified terminal, and Gallo recommended acting soon as prices have begun to rise. Booksellers working with a point-of-sale vendor will need to purchase the terminal that the vendor selects. Gallo noted that “once booksellers find out what that product is, they can buy it from their POS or from Bancard at cost.” Prices for the terminals, which include stand-alone terminals, wireless terminals, and pin pads, currently range from $200 to $700.

When a customer uses their new EMV chip card, it is placed in a slot on a certified terminal while the transaction is carried out. During the transaction, the customer will enter either a personal identification number (PIN) or will sign to confirm the purchase. EMV terminals must be certified by the credit card processors, and that is handled by the terminal maker. Some point-of-sale terminals will be contactless to accept mobile phone payment methods such as Google Wallet and Apple Pay. The transition to EMV chip cards does not affect online, mail, or phone orders, Gallo noted.

By October 2015, credit card issuers American Express, Discover, MasterCard, and Visa will have transitioned to EMV chip cards and will no longer be liable for fraudulent transactions if a chip card is used on a traditional credit card terminal.

As MasterCard’s Carolyn Balfany explained to the Wall Street Journal, the transition to EMV cards “shifts the focus of the liability for fraud onto the party with the lowest technology. For example, a retailer that does not have the equipment to process an EMV card transaction would be liable for any fraud; alternatively, a bank that fails to issue EMV cards, leaving clients with traditional swipe-and-sign cards, would bear the responsibility.”

Booksellers are encouraged to contact Jeffrey Gallo at Bancard or their point-of-sale vendor in order to learn more about the transition to EMV technology and to take the necessary steps to be prepared to accept EMV chip cards by October 2015. More information can be found from Independent We Stand, the Wall Street Journal, and from Chase Paymentech