North American Bancard Blog

What is the EMV Liability Shift?

Posted by Ashley Littles on

Since Oct. 1, 2015 EMV has been all the talk in the payment processing world. As a merchant, you might be wondering what you should worry about. To help you understand EMV and how the EMV liability shift can affect your business, North American Bancard has put together this infographic

EMV Liability Shift

In order to further understand the EMV liability shift, check out the EMV migration forum. This link provides the official document to understanding EMV and the new responsibility of the Merchant. To put in simple terms, after October 15, 2015, if there is some sort of fraud or illegal activity dealing with the transaction, the merchant is now responsible for this. For this reason, it is absolutely essential that all merchants upgrade their devices to EMV-enabled POS devices. By supporting EMV-enabled terminals, merchants can avoid EMV liability for counterfeit card transactions when processing an EMV transaction. The new technology uses encryption to verify and authorize payments. In 2014, approximately 120 million chip cards were issued in the U.S. market, with 600 million estimated to be issued by the end of 2015.

What is encryption?

Encryption is part of the hardware in both the card and the processor. Essentially, it allows the information to turn into unreadable cypher text that needs a key in order to be processed. Encryption occurs before authorization and keeps the merchant from actually having any of the customer’s information. Not only is this a more trustworthy system for the merchant and the customer, but it has heavily decreased fraud worldwide. Although this system is much safer than magnetic stripe cards, some argue that it’s not enough.

What is tokenization?

Tokenization completely removes the card data from a merchant’s servers and replaces it with an alphanumeric code. This code is completely indecipherable for any hackers or people attempting to commit fraud. Even if they do manage to obtain the data from the merchant’s server, the code will mean nothing and be completely unrelated to the original card information.

 

If you found this interesting, you might also enjoy some of these posts:

                  Encryption and Tokenization- What’s the Difference?

                  A Quick Guide to Payment Processing

Topics: EMV

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