As of October 1st, 2015 liability for fraudulent, counterfeit credit and debit card transactions has shifted from the issuer to the merchant, unless the merchant has upgraded to point-of-sale technology and credit card chip reader terminals that accommodate EMV credit and debit card transactions. EMV (Europay/MasterCard/Visa) is an open standard for chip-based credit and debit card transactions and POS devices and credit card chip reader terminals. EMV credit and debit cards contain updated transaction security features vs. mag-stripe cards. Over 40% of credit and debit cards issued worldwide are EMV, and over 70% of the credit card reader terminals and payment terminals installed are EMV compatible; although the US market was the last remaining holdout with EMV chips in less than 10% of all cards issued. With these new EMV credit card chip reader standards adopted in the US by Visa, MasterCard, Discover, American Express as well as banks and terminal manufacturers, this will rapidly change.
EMV credit and debit card chip readers decrease fraud because of a number of features not available on magnetic stripe cards. These features include the microprocessor chip, encoded security credentials from the card issuer personalized for each cardholder and the unique dynamic transaction data created for each transaction. EMV cards cannot be duplicated or “cloned” as is common with magnetic stripe cards. EMV credit card chip reader terminals can also reduce fraudulent transactions by improving the following processes transaction authorization, card authentication, and cardholder verification.
The main reason for merchants to adopt EMV credit card chip reader technology is that without upgrading, merchants will be responsible for fraudulent transactions and losses that stem from them. These potentially steep financial losses far outweigh the cost of an upgrade at the point of sale.
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