The US is switching to new, more secure, credit card technology called EMV (aka chip cards). This means they will be phasing out the old-school magnetic stripe cards over the next few years in favor of the futuristic-looking cards with a gold or silver chip on the left side. This new chip technology also brings with it a change to how fraud liability is handled between card issuers/banks and businesses processing credit card payments.
What is EMV?
EMV, which stands for Europay, MasterCard and Visa, is a secure payment card standard created by the three companies it’s named after. More commonly EMV is referred to as “chip cards.”
With older mag-stripe cards (the ones you swipe) if your card is lost or stolen anyone can use it – signature checks don’t always happen, and when they do signatures are easy to forge.
With the new EMV technology you’re sometimes required to enter a PIN when processing a transaction, which is more secure than a signature. Plus the chip uses encryption technology that makes it impossible for the chip (and your card) to be cloned.
When did the switch happen?
The switch to making chip cards the preferred card type happened on October 1st, 2015.
While this technology and chip cards might be new to the US, it’s already in use in more than 80 other countries, with the first countries in Europe, Asia, Africa and The Middle East switching over as early as 2006. The October 1, 2015 switch actually makes the US one of the last countries to adopt the newer and more secure chip technology.
Why is this happening?
Almost half of the world’s credit card fraud now happens in the United States—even though only a quarter of all credit card transactions happen there.
Magnetic stripe technology is really old – it was first used in the 1970s – and has not changed much since then. It’s the same technology that powered things like 8-track and cassette tapes and it’s probably not the kind of tech you want holding your financial data in the 21st century. This new chip technology will help keep both business owners and their clients financial data safe and secure.
What does this mean for me?
The Liability Shift
Since this new chip technology is much more secure than magnetic stripes, the credit card companies are making them the new standard way to complete a transaction. To “encourage” the transition, the card companies are shifting liability for fraud to merchants if a chip enabled card is swiped. This means businesses themselves will be responsible for any losses as a result of fraud that occurs when a chip enabled card is swiped for a transaction.
|If you SWIPE||a Magnetic Stripe Card||the liability lies with the CARD ISSUER|
|If you DIP||a Chip Card||the liability lies with the CARD ISSUER|
|If you SWIPE||a Chip Card||the liability lies with the BUSINESS OWNER|
How is FreshBooks helping?
FreshBooks has introduced the FreshBooks Card Reader. The FreshBooks Card Reader accepts both the new chip enabled EMV cards and older mag stripe cards as well.
Developed and designed by FreshBooks the Card Reader is powered by FreshBooks Payments and integrates seamlessly with your FreshBooks account. Just fire up the FreshBooks app on either your iPhone, iPad or Android phone, plug in the Reader and take your customer’s payment right on the spot.
Using a Card Reader made for FreshBooks means:
- The Card Reader works right out of the box
- Automatic recording of payments and transaction fees
- Automatic deposits into your bank account
- Automatic payment receipts sent to your clients
- Award winning customer support
FreshBooks users in the United States can order a Card Reader right from their iPhone or iPad app.