NATIONAL REPORT—This October, all major credit card companies in the U.S. market, including Visa, Mastercard and American Express, will migrate to the Europay Mastercard Visa (EMV) standards that have been customary elsewhere in the world. In doing so, liability will shift from the credit card companies to merchants for any merchant that has not updated its point-of-sales solution.
While credit cards in the United States have traditionally had magnetic stripe technology, the new credit cards will offer chip technology, which creates a unique transaction code that can’t be used again for each payment. “At first, it will be a chip-and-sign process so if the merchant has EMV technology, the card will be swiped for the chip, but the customer will sign,” explained Jordan Bernstein, senior associate, Michelman & Robinson, LLP. “[Eventually,] PIN technology will be implemented, whereby you’ll have a double-identification process. A PIN is much more secure than a signature.”
Bernstein noted that, as of October, any merchant that doesn’t update its POS system would be liable for fraud if the consumer uses an EMV-capable card. “If they use an EMV-capable card with a chip and you have not updated to that technology, that liability is on you,” he said. “Credit card companies have taken the next step with technology that is more secure, but [merchants]have to meet them halfway by updating their systems.”
Bernstein noted that it doesn’t seem like many vendors and merchants, including hotels, have made the transition yet. “Many are continuing to operate under the old system because it costs money to upgrade, and they’re likely unaware of the technology outside of those who have traveled to other countries and seen it used,” he said. “There’s cost associated with updating terminals, for sure, but that is the nature of the world. If you don’t update technology in order to make transactions more secure, then you’re really putting yourself at risk. This is a big shift and it’s for your benefit.
“We’re only in March, and there’s plenty of time to upgrade,” he said, adding that, while hotels are investing in updating their POS terminals, it would be prudent to also investigate terminals that accept near-field communications (NFC) payments, the technology behind solutions like Apple Pay and Google Wallet. “That’s the next step,” he said. “It’s tied to your credit card, but it’s a different transaction mechanism. Vendors might as well get the NFC component as well because it’s becoming more ubiquitous.”
—Nicole Carlino