The lack of security in the credit card industry gained ominous prominence in 2014. We saw security breaches from Target and Home Depot where customer’s credit card information was stolen and hacks where personal information such as phone numbers and addresses were stolen from banks such as JPMorgan Chase. For the first time, many consumers who had casually handed over their cards to anonymous clerks and rattled off their security codes to invisible voices over the telephone were brought up short. Clearly, there needed to be a change in the security of electronic payments.
With the dawn of 2015, we are seeing a concerted move toward consumer protection in the industry. As always, that means there are new words and concepts to get your mind around, and the quicker the better. Read up on these four payment processing buzzwords and you’ll be ahead of the curve.
- Magnetic-stripe cards. You might be saying to yourself, “That’s not new, is it?” and you would be right. In fact, these are the cards we have been using for the past four decades. So antiquated are they that they actually use the same past-its-due-date technology that once sent cassette tapes hissing through your stereo components. Unfortunately, they can be easily replicated and counterfeited. Because they have been linked to numerous incidences of identity theft, they are finally being phased out in the U.S.
- EMV/chip cards. Enter the new technological standard for credit card processing in this country. These so-called chip cards are much more difficult to counterfeit than their magnetic predecessors. The customer’s payment information is stored on a secure chip that authenticates the card by communicating in real time with the payment terminal or ATM. Soon, the U.S. will adopt this infinitely more secure solution, the same one Europe has successfully used for years. As a small business owner, you will be required to accept these cards.
- Liability shift. If you haven’t heard this term yet, you’re guaranteed to know about it in a few months. That’s because in October of this year, you will be liable for any fraudulent charges you swipe using the old magnetic-stripe reader. If your customer has the chip card and you choose to process the transaction using the magnetic-stripe instead of the chip, you could be held accountable for the counterfeit charges.
- Near field communication (NFC) or contactless payments. These types of transactions do not require any physical contact between the buyer’s credit card or mobile phone and the point of sale terminal. Countries including Canada and Australia have embraced this secure and sexy new way of paying, and it’s only a matter of time before merchants in this country also do.
The well-publicized security breaches of the past year or two raised a warning that even change-averse American banks and credit card companies could not ignore. In the upcoming months, U.S. business owners, both large and small, will become very familiar with what will soon be the new security status quo.
Get ahead of these issues for you and your company by securing your EMV terminal for free today.