A few weeks ago, I had to make a quick stop at a big-box store to pick up a giant tub of peanut butter. I lugged my PB up to the register and got behind a man getting ready to pay for his purchases. The man swiped his credit card and waited. He looked at the small processing machine and frowned. The clerk asked if he had a newer card with a chip. He looked confused and showed her the card. After confirming the chip was indeed bedded into the front of his card, she told him to put the end of his card in the bottom of the credit card processing machine. He did so, with a quick swipe resulting in several angry beeps. She told him to hold it in the machine longer on the second try. He attempted three more times, becoming increasingly frustrated, before giving up and paying with cash.
In the US, chip or EMV enabled cards (i.e., “smart cards”) are set to replace the magnetic strip technology that is abundantly used today. Traditionally, credit card companies have taken on the liability of any fraud/loss that happens on their customers’ cards. They have requested retailers have EMV card readers installed and in use by October 1st. The underlying message is that retailers will take on the liabilities of fraud if customers continue to use old magnetic strip readers.
With the additional costs for a new card reader, plus the hassle of learning a new method to pay, what is the benefit of using EMV technology? The answer is pretty simple and straight forward: Security. Traditional magnetic strip cards contain all the customer’s card information: the account number, the expiration date, and even the 3-digit security code. Fraudsters can steal all of this information in one quick swipe. They employ the use of skimming machines that they place on top of the actual card reader to record the data and get away with your information (like the article we shared on social media, see here). In contrast, the EMV reader requires the customer to place the end of the card in the machine, so it can access the chip to process charges. The chip provides ever-changing numbers (a unique “token” per transaction), instead of the actual account information. A fraudster could possibly steal the information, but it would be outdated and unusable the instant after it is taken.
In Europe, EMV technology has been in use since 1994 and credit card fraud there is nearly non-existent. There is no question that using smart cards will prevent fraud and protect consumers. It is also clear that there will be a learning curve for both store personnel and their customers. It can feel awkward learning something new with a line of customers waiting behind you. With the proper training, however, clerks can make the process smoother by providing clear directives to their customers. Armed with the knowledge of the benefits, they can also let their customers know why these changes are important. With these tools, they can potentially prevent the frustrated customer from walking away or using an alternate payment method.