EMV Credit Card Terminals and why the world is not going to end

(Last updated on: August 19, 2016)

EMV terminals represent a change in the way things are done. Card issuers are starting to take security seriously. There will be advantages but mostly for the card issuers. Hardware suppliers will be happy selling the new terminals. Banks will be able to start doing their own processing again. They will no longer need gateways (like Authorize.net). Mail order and telephone order transactions can also be handled by the terminals. EMV terminals will keep alternative payment systems (Apple Pay, Square, and Bitcoin) within their banking systems.

EMV stands for Europay, MasterCard, and Visa. This has been around since 1995 and is now being adopted by American credit card issuers. Most of the use has been in Europe. It has been successful in discouraging “card present” fraud. In April 2015, our newsletter notified our customers of the move to EMV. At that time, we provided three links to articles about EMV. If you haven’t had a chance to read them, here they are:

Four Reasons Merchants Should Make the Switch to EMA Now

Eight  FAQs about EMV cards

Slow Retail EMV Transition Miffs Bankers

Basically, EMV is a computer chip embedded in the credit card. The chip is read by the terminal. Since it is accepted that the chip cannot be counterfeited, the card is accepted as genuine. If there is fraud (stolen card, counterfeit card) the card issuer will cover the cost of any fraud. Also, the burden of PCI compliance is lifted from you.

What if you don’t have an EMV terminal? You can still use your faithful card swipe with Wintix. However the rules have changed. Fraudulent transactions will be your responsibility – not the bank’s, as of Oct. 1, 2015. This liability shift only affects in-person, card present credit card transactions. For phone orders, mail orders and eCommerce transactions, the issuers of the credit cards will continue to be held liable for any credit card transaction that occurred using a fraudulent or stolen card.

How much will this liability cost you in the case of a fraudulent card?  Your cost is the amount of the credit card transaction plus your merchant processor’s charge to you that is covered in your merchant discount rate plus the payment gateway charge (Authorize.net or Pay Pal).  There are no extra fees or penalties that will be applied.   This is very similar to a charge back. The only difference is that with a charge back, you can contest the charge back and contact your patron to reconcile.  Of course, this takes time, but you may be able to get the money back from the patron.

Using EMV terminals is a little more trouble:

  • The cost is about the same price as a small thermal ticket printer ($395-$550 per terminal depending on the make and model)
  • Each terminal needs to go through a process called “key injection.” This takes about two days. Key injection burns your unique identifier into the terminal
  • Delivery is about two weeks – if the unit is in stock
  • The time to do a transaction is a couple seconds longer
  • EMV does not have any effect on phone orders, mail orders or Webtix orders.

What do we recommend? First of all, relax. Switching to the EMV terminals will be an expensive upgrade. Is it worth it?

For Wintix, probably not. Consider your theatre’s fraudulent charges. Have you received any fraudulent transactions (not charge backs) over the past two to five years? If so, calculate the dollar amount of these charges and consider whether this amount would justify the purchase of EMV terminals.

Is it worth it for Webtix orders? Webtix is currently doing about 50% of the sales for most of our active customers. Webtix is unaffected by EMV.

Most of our customers will experience one fraudulent transaction a year. That is not enough to justify the purchase. On the other hand, if you are a retail shop selling expensive items, it will be a different matter entirely.

Are magnetic card readers going away? Not right away. There is no effective date in place to remove these MSR card readers. Many people will not have received their new credit cards embedded with the chip by the end of the year. Also, as of now, September 2015, only 34% of the merchants have switched over to the EMV terminals. It is expected that 66% of the merchants will not have switched by the October 1, 2015. The credit card industry does not foresee the magnetic card readers disappearing entirely for maybe 10 years from now.

There are a lot of other technologies on the horizon. These include Apple Pay, Near Field Communications (NFC), Android payment and Bitcoin. Will they become popular with your customers? We don’t know.

What is Center Stage Software doing to prepare for the liability shift? We are currently working with our Merchant Services Provider, MerchantPlus, and Ingenico, one of the leaders in the marketplace for EMV terminals. We are developing an interface to integrate Wintix with the Ingenico terminal. Once we have developed the interface, we will provide you with the form to complete for key injection of your terminal.

Disclaimer: Information for this article was compiled from a variety of sources. These included Zac and Narvin of MerchantPlus, various web sites, Ingenico Corp, and Scansource. We have made our best effort to be accurate. However, no guarantees can be made. The bankers hold the cards here. We recommend that you check with them.

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