If you haven't recently received a new credit or debit card from your bank, you will. When you get it, pay attention to the holographic-looking computer chip (called an "EMV" chip - see below) on the face of the card. U.S. banks are migrating to an embedded chip instead of the traditional magnetic strip to capture and process card-present transactions. Beginning October 15, 2015, the liability for fraudulent card-present transactions will shift from the issuer of the card (Visa, Mastercard, American Express, etc.) to the business or non-profit organization.
Recent high-profile breaches of credit card data (Target, for example) have compelled credit card companies to seek a more secure method of data transfer. The industry's answer to this issue is the Europay, MasterCard, and Visa (EMV) chip. The new technology requires that the credit card remain in the card reader during the entire transaction to allow interaction with the chip, making it much more difficult to steal consumer data. The new readers will continue to read magnetic strips to accommodate cards that only have a magnetic strip, and cards with the new chip will also have a magnetic strip to accommodate businesses that have not adopted the new readers.
Businesses will have to weigh the cost of the new hardware, software and implementation with the benefit of fraud liability protection. Whatever the decision, the cost of processing card-present transactions will increase on or before October 15, 2015.
Daria A. Cruzen, CPA