Published On: August 12, 2016

Modern day consumers are blessed with the advent of credit cards with chip security because they do not need to worry about being held liable for fraudulent transactions that they never made. Credit cards with chip security are businesses’ and merchants’ life saviours as the market is bombarded with scams and new forms of crime. To summarize, there are 8 things that every business owner needs to know about credit cards with chip security and their benefits. Read on to find out what these 8 things are and improve your overall knowledge of the credit card industry plus your business.

1. What are Credit Cards with Chip Security and EMV Technology?

Credit cards with chip security are also known as smart cards or EMV cards that contain embedded microprocessors which provide transaction security protection and other features that traditional credit cards cannot surpass.

Credit cards with chip security are often classified as having the EMV technology which provides an added layer of protection against data breach and frauds. The EMV encryption technology that’s featured in credit cards with chip security acts as an important first line of defense against potential breaches (What are Credit Cards with Chip Security).

2. What is EMV Technology?

Essentially, credit cards with chip security utilize EMV technology that stores credit card data on integrated circuits in addition to magnetic stripes. Cards that complement this technology include cards that can be inserted into the reader and contactless cards that can be read over a short distance using radio-frequency identification (RFID) technology. Cards that comply with EMV technology are also called Chip and PIN.

EMV stands for Europay, MasterCard, and Visa, the three companies that originally created the standard. The standard is now managed by EMVCo, a consortium with control split equally among Visa, MasterCard and American Express.

In Canada, VISA, MasterCard and American Express offer the most common implementation of credit cards with chip security (What is EMV). In fact, new legislation is making EMV compliance mandatory in Canada. In 2016, the SHA-1 standard of 128 bit encryption is being phased out in favour of the significantly stronger 256 bit SHA-2 standard.

3. History Prior to Credit Cards with Chip Security

Before the introduction of credit cards with chip security features, payments were conducted with a credit card or debit card that needed to be swiped through a magnetic field or mechanical imprint to read, record data, plus a signature for verification. Traditionally, customers handed their cards to the clerk at the point of sale, who would swipe the card through the magnetic reader. Subsequently, the POS machine would print out a slip for the customer to sign.

This old system has a number of security flaws, including stealing someone’s card or forging a signature. More recently, technology has become available on the black market for both reading and writing the magnetic stripes, making cards easy to clone and use without the person’s knowledge.

4. Chip and PIN versus Chip and Signature

Credit cards with chip security are the most secure type of credit and debit cards. This is because instead of signing a receipt for identification purposes, the user just enters a personal identification number (PIN), typically of 4 digits in length. This number will correspond to the information stored on the chip, which makes it much harder for fraudsters to replicate the card. Therefore, if someone steals a card, they can’t make fraudulent purchases of higher ticket items unless they know the four-digit PIN.

5. Benefits of Credit Cards with Chip Security for Customers

According to Visa Canada, as a consumer you are protected and benefit from the following advantages:

Peace of Mind: The enhanced features of credit cards with chip security ensure that when consumers use their cards, various state-of-the-art security measures will come into play and alleviate any breach of security that might occur.

Increased security against unauthorized use of your card: Consumers do not need to hand their credit cards to the merchant when making payments, they can hold onto the card and not lose sight of it.

Increased security against counterfeiting and skimming: A lost or stolen Chip card cannot be used to complete a high value transaction without entering the right credentials. The EMV technology eliminates the ability to copy the card.

6. Benefits of Credit Cards with Chip Security for Merchants

According to Visa Canada, as a merchant, you are protected and benefit from the following advantages:

Increased checkout speed and improved customer service: Since entering a PIN requires a couple of seconds, merchant does not need to ask customers to sign transaction receipts, thus completing the transactions faster.

Increased protection against fraud: As mentioned earlier, it is virtually impossible to copy someone’s credit card with the correct PIN, so both the merchant and the customer benefit because it results in fewer chargebacks.

Simplified, more efficient store operations: The invention of the PIN drastically reduced the need for merchants to verify the customer’s identity, further improving efficiency and service as well as easing retail operations at the point of sale.

Support for new features and functionality: Credit cards with chip security adopt technology such as Visa payWave™, which allow cardholders to make low-value, everyday purchases faster and more conveniently than cash, by waving their card against a contactless reader.

7. How are Cardholders Verified with EMV?

EMV Connections lists the following 4 cardholder verification methods (CVM):

  • Online PIN, where the PIN is encrypted and verified by the issuer
  • Offline PIN, where the PIN is verified offline by the EMV chip card
  • Signature verification, where the cardholder signature is compared to the signature on the back of the card
  • No CVM, this occurs in low value transactions or for transactions at unattended POS locations

8. How MONEXgroup Can Help your Business Process Credit Cards with Chip Security

Being Canada’s leading independent payment processing provider for well over a decade, MONEXgroup’s mission is to provide innovative, cost-effective and stress-free merchant processor solutions which include fully-integrated point-of-sale terminals, wireless and e-commerce payment solutions and technologically advanced Mobile Checkout to our merchants nationwide. We guarantee our merchants top-of-the line technology and customer service, as our vision is to be the leading customer-focused payment provider by forging long-term relationships and offering innovative payment solutions throughout Canada.

MONEXgroup offers businesses in Canada with the latest secure payments system solutions for their everyday business. Security, reliability and innovation combined with the latest POS technologies are readily available to every merchant. We deploy the most up-to-date secure solutions and security features to our countertop and wireless terminals which support ALL credit cards with chip security and EMV technology. Our Countertop & Wireless Terminals ensure and enhances the privacy and security of financial data associated with every credit card payment. The security measures offered through EMV Chip and Pin Technology authenticates credit cards with chip security, supports faster transactions through PIN verification, and reduces the risk of chargeback.

When partnering with the number one payment processor in Canada; MONEXgroup will increase your efficiency and quality of service and lower the related costs and receive the latest Merchant Services Canada Interchange Rates. Request a Cost Comparison Analysis today.

Author: Lindsey Lu, Marketing Communication Specialist, MONEXgroup
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