22 Oct EMV Compliance Coming to Colorado
There have been innumerable stories in the news this year about credit card fraud. Huge retailers like Target and Home Depot have discovered enormous gaps in their credit card security infrastructure. As a result, millions of customers have had their personal information compromised. Unfortunately, these lapses in security were the disaster that everyone in the industry saw coming.
For years, the US market has relied on magnetic strip credit cards and readers. This technology was first pioneered in 1960 and really hasn’t changed too much since then. However, as of October 2015, there is a huge change coming to credit card processing infrastructure in the US and the sooner you get your business ready for it, the better.
Introducing the EMV system, a modest but massively important leap forward in credit card security. EMV stands for Europay Mastercard & Visa (which is a bit of a misnomer because you’ll see these chips for American Express and Discover also). EMV is a comprehensive, globally ubiquitous credit/debit transaction authentication system. Simply put, EMV is a far safer credit card processing infrastructure than the one in place now and, ready or not, it is coming to a cash register near you.
It’s hard to overstate the scale of the change this seemingly minor shift in credit card security processing will entail. Consider that the average american credit card holder has approximately 3.5 credit cards in their purse or wallet. At a minimum, the conversion to all EMV capable cards (sometimes called Integrated Circuit (IC) cards) will necessitate the creation of hundreds of millions of new chips, cards, and associated algorithms. The numbers get even more impressive when one considers the approximately 15 million point of sale terminals that will also need to be updated. That is to say nothing about the ATMS, Debit Cards, and integrated vending systems such as fuel pumps or soda machines that will eventually need upgrading.
IC cards are more secure than a traditional magnetic strip credit card because they utilize not only the cardholder’s pin, but also advanced cryptographic algorithms such as Triple-DES. Triple-DES which stands for Triple Data Encryption Standard applies a highly sophisticated standardized encoding system to every transaction associated with a given card or terminal. True to its name, Triple-DES applies this system three times for every data block it encounters. In short, EMV enabled credit card systems apply vastly more computing power and sophistication to security than a simple magnetic strip ever could. An apt comparison would be between a vhs cassette tape and a one terabyte thumb drive. There is simply way more memory and connectivity offered by EMV systems than by old fashion magnetic strips.
How does this affect business in Colorado?
So far, EMV compliance has not been mandated by law in the US, but by October 2015 businesses all along the Front Range and all over the nation will be confronting a potential liability shift for credit card related fraud for non-compliant systems. This means that if you are not up to date with a EMV enabled system and your POS terminal is somehow compromised, your business could be held partially responsible.
There are still questions about how to integrate secure mobile payment systems such as Google Wallet or Apple Pay, but near field communication devices (like the ones embedded in your smartphone) will definitely be something developers consider when creating new EMV compliant terminals. Ultimately, because of the ubiquitous nature of the EMV systems retailers that adopt the system will be opening their doors to clients all over the world. This upgrade will probably be seen years from now as an important step in creating a more stable and unified world economy. Not bad for a little chip in your credit card.
At Advocharge, we’ll stay on top of all these developments in technology and compliance and help make sure that your business has access to the hardware and software it needs to operate safely and successfully within the new EMV compliant infrastructure. We’ll also be there to ensure that you have the analytics support to visualize and break down the numbers from all your credit card transactions. Keep checking in on our blog for more updates as the year progresses and, if you have any questions about EMV compliance for your business, feel free to reach out to us any time.