EMV/Chip & Pin

What is Chip & Pin EMV?

EMV stands for Europay, MasterCard and Visa, a global standard for inter-operation of integrated circuit cards (IC cards or “chip cards”) and IC card capable point of sale (POS) terminals* and automated teller machines (ATMs), for authenticating credit and debit card transactions.

A mandate is something the payment network expects compliance with, e.g. a requirement, without which you cannot accept credit cards. EMV IS NOT A MANDATE.

So what is EMV? It is actually a liability shift.

By liability shift the payment networks mean that a non-EMV compliant party will be liable in the event that an EMV chip card is used at a non-EMV-capable terminal, and the resulting transaction is determined to be counterfeit fraud. In plain English, if you accept a counterfeit chip card, you, the merchant, may be liable for that charge. What determines who is liable for the counterfeit charge is who is the least compliant. If you as a merchant don’t have the ability to accept EMV cards, and someone fraudulently uses a card at your location, then you are liable for the funds and any fees or fines associated. However, if you do have the capability, but the cardholders bank hasn’t issued them an EMV card, or the processor hasn’t adopted EMV standards, then the liability switches back onto the issuing bank or processor.

Each acquirer (an acquirer is generally seen as the bank or entity that the merchant uses to process their payment card transactions) must assess their situation to determine if and when it makes sense for them to migrate to EMV. Not all banks/processors (acquirers) are going to make the immediate switch to EMV. If, for example, they deem that fraudulent transactions are an extremely small percentage of an acquirer’s transaction volume, the acquirer may decide to defer upgrading until a later date; they therefore accept the risk that they may accept a transaction initiated by a counterfeit EMV chip card and as a result they may be liable for that counterfeit fraud.

Does Aloha have an EMV Solution?

The short answer is ‘Yes’. NCR, Aloha’s parent company, is working on a new gateway called NCR Connected Payments for Hospitality to provide our customers greater flexibility and choices regarding payments. NCR will be utilizing its cloud-based Connected Payments platform to implement point-to-point encryption, EMV and mobile wallet capabilities for AlohaPOS customers. Connected Payments is currently in use in more than 17,000 NCR Retail customer locations.

What Does EMV Mean for Me?

The good news is the sky is not falling as some would have you believe. The biggest risk is not from being on the wrong side of the liability shift when the October 2015 deadline comes; rather it is from data being stolen directly from your point of sale system. Being able to accept chip cards is important, but EMV only protects a restaurant from fraud related to someone using a counterfeit card for an in-store transaction. It does not protect the restaurant from data security-related breaches. According to the 2014 Trustwave Global Security Report, 18% of electronic payment system attacks in 2014 targeted food and beverage establishments.

There is a huge backlog from credit card providers transitioning to, and shipping out, chip-embedded cards. Then it will take time – some estimate as many as seven to 10 years – for chip-based cards to become fully integrated into the marketplace.

In the meantime, as NCR Connected Payments for Hospitality gets closer to market ready in the coming months, we will post updates to our web page as well and other means of communication to get the word out to our valued customers. Continue to check back often or feel free to contact your STG sales representative for alternative options. 

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