Have you heard about the new EMV chip technology? Have you given any thought to how it may impact your salon or your guests?
By October 2015, U.S. credit card networks and merchants will adopt EMV payment systems and point-of-sale technology. EMV chip technology, named after its creators – Europay, MasterCard and Visa – will replace the dated magnetic stripe technology currently on major credit and debit cards in favor of tiny computer chips.
With the deadline looming for merchants to update their card readers to be compatible with EMV payment technology, it’s critical for retailers and card providers to understand the implications of the change. After the deadline, retailers and banks that support magnetic stripe cards will be liable for any fraud losses that occur through the use of the cards, and will face serious damage to customer loyalty and sales if a security breach occurs.
Here are three important aspects of EMV technology that retailers must understand:
1. “Chip & Signature”
Functionality
EMV payment technology is commonly referred to as “chip & pin.” However, most merchants and card providers don’t realize that this technology will likely not include PIN authentication in the U.S. On the contrary, EMV technology in the U.S. is expected to use signature authentication rather than PIN authentication, making “chip & signature” the more appropriate phrase.
2. Online Security
While the use of computer chips in credit and debit cards is a huge step forward in terms of security for in-salon purchases, the widespread U.S. rollout of EMV technology may actually increase online payment fraud. EMV technology in the U.S. doesn’t incorporate any meaningful improvements to online payment security. As a result, fraudsters are likely to shift their focus to targeting online shoppers, where the technology is still insecure. So if you offer your salon guests any ecommerce options, you need to be aware of the potential risk.
This has been the trend in other countries that have adopted EMV technology. For example, in Europe, while in-store fraud has decreased dramatically after the implementation of EMV chips and in-store readers, online fraud actually increased 21 percent in 2012, in part due to the introduction of EMV chip cards.
3. Steps that salons with eCommerce capabilities can take
Since increases in online fraud are inevitable once EMV technology is rolled out across the U.S., merchants and card providers need to take several precautions to protect their customers’ data. Implementing frictionless, context-based authentication enables businesses to verify each account login based on anonymous user identities, device usage, geo-location, customer behavior and other factors without compromising the user’s identity, personal information and data.
While my overview of this topic has been high-level, salon operators need to be aware that this change is coming, and they will need to work closely with their point-of-sale software providers and their associated credit card processors to ensure all parties involved are prepared for it. ■
