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Introducing Chip and PIN

The way that you as a business owner, process card payments from your customers is changing. This guide and accompanying video will explain the changes to the cards, the payment terminals and how it will affect you.

We hope this video helped explain the upcoming changes to credit card payments in the U.S. Read the full guide below for more information.

Credit card processing terminals

Credit card processing terminals or payment terminals, are one of the most popular ways for merchants to take payments across the country. Card payments are easier and safer than handling lots of cash.

Traditionally, payments have been made by swiping the customer's card through the terminal. The terminal reads the customer’s details from the magnetic strip on the back of the card. This information is then sent simultaneously to the acquiring bank account and your merchant account, allowing the transaction to take place.

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Problems with swipe and sign

The problem with swipe and sign is that the magnetic strip on the back of the card is not very secure. The information can easily be stolen and duplicated onto a blank card. It only takes seconds for a card to be stolen and swiped through a reading device. Not only is this worrying for the customer, it can cause problems for you, as an employer, as your staff could be accused of duplicating a customer’s details whilst handling their card.

Another problem with swipe and sign is that cards can be stolen and used at will, simply by forging the signature on the back of the card. It can sometimes take a long time to notice that a card is missing and in that time a thief can spend hundreds or thousands of dollars on the card.

Chip and PIN introduction

From October, America will be transitioning to the chip and PIN (personal identification number) method, which is already used by most of Europe and Asia. Chipped cards, also known as EMV cards, are much safer than swipe cards. All customer information is stored on a microchip, which is a lot harder to duplicate or steal information from than a magnetic strip.

Chip and PIN cards have an added layer of security because the PIN is used to verify the transaction, rather than a signature, which could just be copied from the back of the card. This means that a stolen card will be useless to thieves unless they have the PIN, which should be kept private by the cardholder at all times.

The U.S. will not be instantly transitioning to chip and PIN, as the new technology may take some time to get used to. Most newly issued cards will use what is commonly known as ‘chip and signature’. Chip and signature cards are safer than swipe and signature, thanks to the EMV technology, but they are still verified using a signature, as opposed to a PIN. The ultimate goal is to completely transition to chip and PIN as Europe and Asia have.

Real experiences with chip and PIN

Watch our latest video to find out how real Americans have found their experience with chip and PIN.

How does this affect you as a business owner?

As a business owner, you will have to make sure you have technology capable of accepting EMV cards, if you wish to continue accepting card payments from customers. This may mean updating your payment terminals.

The most important factor to consider is that from October, the liability for card fraud will shift to the merchant with the less advanced technology. So, if your payment terminals can only handle swipe technology, it is likely that you will be liable for any fraud experienced by your customers.

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