Provider Strategy

Transitioning to Chip-and-Pin

Adopting EMV requires some caution and roadmap.

• By Michelle Tohill
• Dec 01, 2015

It sounds obvious, but a key element in retail sales success is actually being capable of processing retail transactions. For HME providers that means ensuring that they have the right point-of-sale (POS) infrastructure in place, and part of that infrastructure must include the ability to process transactions using credit and debit cards.

However, not all providers might be aware of the latest developments in POS transaction processing. The most important is EMV cards. Also known as chip-and-pin cards, EMV (which stands for Europay, MasterCard, and Visa, the three companies that launched the standard), the cards aim to increase security by storing data on integrated circuits, rather than magnetic stripes.

The major cards in the United States, MasterCard, Visa, American Express and Discover, have been transitioning to EMV, and all announced plans that they would shift fraud liability for non-EMV card transactions on Oct. 1.

Oct. 1 has come and gone, and if they haven’t yet implemented new EMV processors in their stores, DME and HME retailers are now dangerously exposed to violating the new EMV standards. Yet many U.S. retailers have still not brought in new card reading processors.

Understanding EMV

EMV is a global payment system that reduces credit and debit card fraud when making in-person transactions. All cards now have a microprocessor chip in addition to the standard swipe strip. This chip is designed to be inserted into a special card reader that establishes a unique transaction code for each payment. As a merchant, you need to get a new card processing machine to be able to read these types of cards.

The important thing for DME and HME businesses conducting these transactions is to understand why they need to invest in costly new processing hardware and software. While merchants are not required by any law to have an EMV reader, without one, they are exposed to greater liability. As of October 1, merchants are now held responsible for any fraudulent activity if they are not able to accept chip-enabled credit and debit cards.

In addition to a magnetic stripe, the new EMV cards, which most credit and debit card customers had received by October 1, have a chip in them that can send unique data with each credit or debit transaction. The EMV chip transmits a variable algorithm with each transaction, making the data more secure than static data, which is what magnetic stripes offer. Only EMV-enabled terminals can read and decode EMV cards. EMV technology makes it virtually impossible for thieves to duplicate cards.

Tricky Transition

EMV cards have been established in Europe for many years, where they have been proven to dramatically reduce credit card fraud. The United States has lagged behind other countries that have already improved credit card security using EMV. And that’s surprising, because, although the United States accounts for just 25 percent of the world’s credit card transactions, more than 50 percent of all fraudulent transactions happen here.

While most credit and debit cards have been upgraded to the new EMV standards, many retailers are behind on implementing the new system. This is based on various reasons, and while the simplest is a lack of knowledge or understanding about the liability involved in not having EMV processing, it’s not that simple.

Many retailers are reporting that their merchant service providers have been slow to support the new hardware and software required. Additionally, there are increased costs involved, including the cost of new readers and new software processing systems.

Some retailers who have invested in new card readers find that the hardware or software they use is not EMV-ready, even though they were promised that it would be. This means that they thought they would be using EMV by now, but can’t due to merchant service issues. Although in most cases the merchant providers are shouldering the fraud risk in these cases, it doesn’t make retailers sleep any easier.

But even retailers that have fully functional EMV card readers are running into issues. Many customers still don’t have chip-enabled cards. And those that do, complain that EMV transactions take longer. Customers have trouble using the new machines, which require them to leave their cards in the reader for a few seconds while the code is generated — the opposite of the swipe motion to which they have become accustomed. This learning curve slows transaction times, frustrates customers and employees, and lengthens checkout lines.

How to Adopt EMV

Despite the very real frustrations and costs surrounding EMV, the bottom line is that DME and HME merchants who don’t implement the new card readers are exposing themselves to high levels of fraud risk from which they were previously protected. For retailers that haven’t yet upgraded to EMV readers, now is the time to contact merchant services and get the process started.

And for those that have gotten their machines and are facing challenges, stick with it! As long as these standards are in effect, you’re protecting yourself and your business by using EMV.

Here are some tips to getting on track with the EMV system:

• Reach out to your electronic processing, merchant card services or billing vendor immediately and inquire about your options for EMV.
• Your primary objective is to get the EMV card machine in your stores and ensure that your software is fully compatible with EMV.
• Train your employees to teach customers how to use the card readers to reduce transaction time.
• Even though there are start-up costs involved, and sometimes higher transaction costs, at the end of the day you must invest in EMV in order to limit liability in your retail stores.
• If your existing vendors are not able to support EMV standards, and if they don’t have an immediate action plan for becoming EMV-ready, then it’s time to seek another solution that is fully EMV functional.

This article originally appeared in the December 2015 issue of HME Business.