Horror stories of large companies who have suffered through data breaches have become more commonplace than anyone wants to believe. These breaches happen when hackers illegally obtain credit card information from large amounts of users. It’s a public relations nightmare for the merchants, and a huge headache for the victims of the breach. Chip and PIN credit cards can make these breaches a thing of the past.
These new cards encode the user’s account information in a computer chip embedded in the card, rather than with a magnetic strip. The chip generates a unique, one-time code for each sale.
The actual name for the new card system is EMV, for Europay, MasterCard, and Visa standards. However, most call them chip cards, or chip and PIN cards.
When a merchant’s system doesn’t store data, it cannot be used to create counterfeit cards. This makes the merchant less of a target for hackers. With chip cards, there’s not a lot the hackers can do with the encrypted data..
In most of the world, when people buy with a credit card they place their card in the reader and then input a Personal Identification Number, or PIN. This is similar to what Americans do when we use cash machines. However, in America, most banks issue cards that allow a signature, rather than a PIN, as confirmation. Some banks require PINs right away. Eventually it’s expected all will.
According to a report by the Federal Reserve Bank of Kansas City, chip and PIN cards could reduce credit card fraud by 40 percent in the US. Getting to that point, though, requires money, work, and expense on your part as a merchant. In the past, credit card companies and banks bore the liability for fraudulent purchases on credit cards. But beginning last October, merchants who hadn’t switched to readers that can take the new cards are liable for fraud if there’s a problem.
Merchants aren’t required to make the switch, but chip and PIN cards are coming. Merchants need to be prepared. While new cards will still have magnetic stripes, businesses are encouraged to shift over quickly. That means buying new credit card machines and software capable of reading both chip cards and magnetic stripe cards.
Credit card companies plan to spend the first part of the year in a push to get companies to upgrade. For example, American Express will offer $100 in reimbursement to merchants that switch to the chip card readers in February.
The idea is to encourage merchants to make the shift, and experts say that sooner is better. Security experts are predicting a wave of data breaches The window is closing for hackers to easily profit from point-of-sale attacks on brick-and-mortar retailers,
If you’re looking for advice on obtaining chip and PIN card readers, reach out to Bluebird Auto Rental Systems today at 800-304-5805. We can help!