Swiping your credit card is synonymous with making a payment for most consumers and businesses. However, the action and method of taking payments are about to change. New credit card processing procedures are set to change the way we process payments, thanks to the 2015 EMV Compliance Mandate. Tami Cohorst, contributor to Entrepreneur.com explains, “EMV is an acronym for Europay, MasterCard and Visa — the ‘big three’ of globally standardized circuit payment cards that use a chip. These chips are used for ATMs, credit card terminals and digital registers. The EMV Compliance Mandate updates the cards’ internal mechanics, and any provider using EMV-reading software will need to comply, too.”

This means that credit cards of days gone by are becoming increasingly rare since the method of processing will be vastly different. In recent history, when you swiped your card the credit card reader would process your information with the magnetic strip on the back. That strip contained unchanging data that identifies that the specific transaction was made by you and then that information would be processed to complete the transaction. Since the magnetic strip is unchanging, a counterfeiter who has access to it would now have your sensitive information.

However, with the new EMV standard, cards embedded with an advanced chip are more secure because the code processing your sensitive information changes with each transaction. This makes it increasingly difficult for counterfeiters and other criminals to access your data.  Also, with EMV cards you no longer have to master swiping the card just the right way. Chip cards are read in a different way. Julie Conroy, research director for retail banking at Aite Group, a financial industry research company, explains, “Instead of going to a register and swiping your card, you are going to do what is called ‘card dipping’ instead, which means inserting your card into a terminal slot and waiting for it to process,” Conroy says. This can take longer than swiping, so consumers are going to have to learn to practice a bit more patience.

The deadline for companies to have the updated software to read these new credit cards with the EMV chip in it is October 1, 2015. So what do you need to do in the upcoming months to be in compliance?

The first step is to have a meeting with your leadership team who represents your tech, marketing, finance, operations, training, risk and compliance, and legal departments (basically those who will use the new equipment or its data). Next, assign a project manager who will oversee the day-to-day usage of the new system, track project activities or tasks, maintain documentation, and find solutions for project issues. In addition, if you have board members or stakeholders, you should schedule a meeting to discuss these system updates and the issues that pertain to these changes (such as the cost of new technology, isolating payment components, any reporting changes, when this new system will go live, etc.). After that, you’ll want to test your system to work all the bugs out and adjust your operating procedures accordingly.

What are the repercussions if you don’t comply by October 1, 2015? “However, keep this in mind: if your system is breached by counterfeiters and credit card data is compromised, the issuing banks that are liable for the fraudulent charges will mostly likely charge your business fines for the security breach, costing your business money,” states technology company AtNetPlus.

While this new system may require an investment initially, the security measures are certainly worth the cost to protect your database and your customers.

 

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Christina Morales

Christina helps provide useful business and legal tips on UpCounsel for our customers and visitors. Having over a decade of writing experience in a variety of industries, she has also been very close to the legal space from a young age with family members who continue to practice business and tax law.

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