Today’s EMV chip cards still give a bow to the past by containing the old-school magnetic strip that allows customers to swipe the card as they always have. By circumventing the more lengthy “dipping” process that was introduced when these cards came to the fore, customers are bringing unintended consequences upon themselves and the merchant they are patronizing.
As you will see, there are good reasons to insist that your customers use the chip reader.
The Security Nightmare of Magnetic Strip Cards
After a seemingly endless parade of data breaches and fraud on a massive scale, financial institutions in the U.S. finally got the message that their counterparts in Europe and Asia already knew: The magnetic strip on credit cards represented a shining beacon for criminals. There were numerous ways that the numbers on the strip as well as the expiration date and 3-digit security code could be quickly copied. It was then a simple matter to make purchases or sell the stolen data on the black market.
The Advantages of EMV Chip Cards
In October 2015, financial institutions began rolling out their EMV chip cards that no longer relied on the strip – although most cards still contained it. With the new system, customers never relinquished their card to the merchant, and all personal data was encrypted and sent on securely to the processing company.
Any fraudulent transaction that took place using a chip reader would be paid for by the financial institution, but the responsibility was on merchants if the transaction was an old-school swipe. If you have upgraded your POS card swipers to now accept chip cards through dipping, make sure your customers always use this option. If you don’t, the financial burden of fraud could be squarely on your shoulders.
Steps You Can Take to Protect Your Business
Of course, the most important way to safeguard yourself against credit card fraud is to upgrade your POS card swipers if you have not already done so. You might be pleasantly surprised at the relatively low cost of making the switch. What’s more, you might find that your new system has additional features that can take your business to the next level, including customer relationship management capabilities and automated features.
Once your system is in place, it is vital to train your staff on the use of chip cards. Be sure they understand the importance of steering customers toward dipping, not swiping, their card. If customers are reluctant to do so, a clear and brief explanation of how their security and privacy will be enhanced is usually sufficient motivation.
In time, chip cards are sure to become the dominant plastic on the block, with magnetic strips going the way of the 8-track tape. But until that happens, take steps to ensure that you and your customers are reaping the enhanced security benefits that chip cards can offer. It could save your business from bearing the burden of fraud or data breaches.