EMV THE DEFINITIVE GUIDE FOR US MERCHANTS AND POS RESELLERS

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1 EMV THE DEFINITIVE GUIDE FOR US MERCHANTS AND POS RESELLERS

2 WHAT IS EMV EMV is a global standard for credit and debit card processing designed to replace magnetic stripe cards. Also referred to as chip and PIN or chip and signature, this smart chip technology consists of a microprocessor embedded into payment cards and smart devices such as mobile phones. 01

3 THE 4 W S OF EMV What EMV refers to the global specifications that ensure interoperability of chip cards, POS terminals and ATMs for chip based transactions. Originally, EMV referred to the founding organizations from 1994 Europay, MasterCard and Visa today the EMV trademark is owned by all of the equity owners of EMVCo: American Express, JCB, Discover, MasterCard, UnionPay, and Visa. When Parts of the world that have implemented EMV have seen considerable reduction of fraud at the point of sale. In the U.S., the card brands are making a heavy push for EMV adoption and have instituted October 1, 2015 as the official date of the fraud liability shift. Who The players affected by EMV include the card issuers, consumers and merchants. Issuers will need to ensure their customers are equipped with EMV cards and know how to use them. Cardholders will need to adapt to a new way of paying via contact or contactless EMV chip technology. Merchants will need to upgrade their POS terminals to be able to process EMV cards and understand how they work. Why EMV provides better protection from fraudulent activity such as skimming and the creation of counterfeit cards. In parts of the world where EMV has been implemented, there has been a significant reduction in incidents of fraud at the point of sale. 02

4 WHAT MAKES EMV MORE SECURE? Cardholder data is more secure on a chip embedded card that utilizes dynamic authentication, than on a static mag stripe card. With EMV, both the terminal and the card play important roles in the authentication process which is not the case when using magnetic stripe technology. MAGNETIC STRIPE Cardholder data resides on a magnetic stripe on the back of the card. Data is static and can be easily skimmed and used to create counterfeit cards. The terminal performs all the processing and applies the rules for payment. Embedded circuit chip EMV Cardholder data resides in a secure chip embedded in a plastic payment card or personal device such as a mobile phone. Dynamic values exist within the chip itself that, when verified by the point-of-sale device, ensure the authenticity of the card. Fraudsters need physical access to the card and even then, the card itself is extremely difficult to clone, thus limiting any potential damage. DID YOU KNOW According to a recent study, U.S. credit card fraud is now a whopping 10 basis points, a 100% increase from just seven years ago, thanks to increasing fraud at the point of sale (POS). Criminals are targeting the U.S. because they are still relying on the less secure magnetic stripe. This is why card issuers are addressing the need for EMV-based transactions. From a security standpoint, the majority of fraudulent activity can be contained by issuing chip cards. 03

5 HOW IT WORKS: TYPICAL EMV TRANSACTION FLOW EMV-enabled payment terminals and peripherals are able to read and process the information either by direct contact with chip, or by close proximity through contactless (NFC) technology. 04

6 CONTACT EMV TRANSACTION CONTACTLESS EMV TRANSACTION A contact EMV transaction consists of the following steps: 1. Cardholder inserts the chip card into the chip reader. 2. Cardholder follows prompts which may include: language selection, card brand selection, confirmation of amount or PIN entry. 3. Result of the transaction is displayed and a receipt may be printed. 4. Cardholder removes the chip card. 5. In some cases a signature may be required to authorize the transaction. A contactless EMV transaction consists of the following steps: 1. Cardholder taps or waves the card or smart device over the terminal. 2. No signature or PIN is required for purchases under the merchant's set limit. 3. For purchases over the merchant's set limit, the customer may be asked to sign, swipe or insert their card. 4. A receipt is printed and the transaction is complete. CHIP AND PIN VS. CHIP & SIGNATURE Chip and PIN requires the cardholder to enter a four digit PIN (could be more digits), which must correspond to the chip embedded in their card. Chip and Signature requires the cardholder to sign in order to authorize the transaction. While Chip and PIN is the more secure option, issuing banks in the U.S. will begin by providing their customers with Chip and Signature cards. An EMV terminal will still be required to read the chip. 05

7 THE RUSH TOWARDS EMV COMPLIANCE IN THE UNITED STATES Visa and MasterCard have instituted a fraud liability shift policy, which transfers liability for certain types of fraudulent transactions away from the party that has the most secure form of EMV technology. Merchants can protect themselves from this liability by ensuring they have implemented an EMV compliant solution. 06

8 FRAUD LIABILITY SHIFT What Merchants of any size are liable for domestic and cross border counterfeit fraud committed at the point of sale if they are not using a compliant EMV point-of-sale solution. When This has taken effect October 1, Who Merchants are liable for fraud that occurs on any chip card used on a magnetic swipe terminal. This means that merchants need to upgrade their POS terminals to an EMV machine to be compliant. Card issuers are liable for fraud that occurs when a chip enabled terminal is available but the consumer presents a magnetic stripe card for payment. CHANGES TO THE PAYMENT PROCESS Contactless technology is creating opportunity for innovation within the payments industry and consumers are already embracing new ways to pay. When a merchant enables contactless EMV on the payment terminal, customers are able to make purchases by simply holding their EMV chip card or mobile device (with compatible mobile wallet) over the terminal. Faster, more convenient transactions are on demand and merchants are under pressure to deliver! Additionally, merchants with EMV contact and contactless-enabled POS devices reduce PCI scope and associated costs. Just another incentive to adopt EMV today! 07

9 IMPLEMENTATION OPTIONS The implementation process for EMV contact and contactless POS transactions varies by merchant type, size and payment infrastructure. There are two basic merchant payment system environments: Standalone and Integrated. Standalone A standalone POS device serves the single purpose of authorizing and clearing payment card transactions and does not communicate with the merchant s POS software on their Electronic Cash Register ( ECR ). With the standalone implementation, the merchant would obtain the sale total from the ECR and then manually input the total into the POS device. Connects directly to a host processor. Infrastructure is totally managed by the acquirer or processor. Is easier to implement with minimal effort on the part of the merchant. Integrated An integrated solution means the payment application software directly communicates with the core POS software solution. Since the POS software solution is also integrated into other back-office applications such as the merchant s accounting system or CRM, payment integration assists the merchant in enhancing efficiency and productivity in processing payments, plus reporting and reconciliation. Streamlines operational capabilities and back-office management. Reduces errors from double entries, especially during periods of peak activity. Provides faster checkout times that can improve customer satisfaction. Makes management easier and allows merchants to perform checkout functions more smoothly and efficiently. Integrates with reporting modules and back-office systems, consolidating transaction information. Reduces PCI scope since the secure payment application, not the hardware, handles card data. 08

10 YOU RE IN GOOD HANDS As your trusted partner, Pivotal Payments has years of real-world EMV implementation and support experience that can address your requirements. Our turnkey solutions are ready now. EMV IMPLEMENTATION EXPERIENCE 6 years of EMV experience in Canada, bringing extensive knowledge to US merchants. Technical expertise in all implementations of EMV. EMV technology, client care and support for your business. Future-proof payment solutions: be ready for whatever comes next. ABOUT Pivotal Payments is a leading provider of technology-driven global payment processing solutions to the point of sale, B2B and ecommerce industries. Our proprietary solutions include card not present, integrated POS and mobile payments that deliver efficiency and profitability to businesses across all sales channels and platforms. With a focus on security and fueled by continuous investment in research, product development and innovation, we are shaping the future of payments. Our goal is to maximize our clients' revenues and performance by empowering them with safer and smarter transactions. 09