Chip card in credit card processing Article Re-posted by Centurion Payment Services. By Robin Sidel (All content is 100% written by Robin Sidel, re-posted by CPS) EXTON, Pa.—Inside a one-story brick factory surrounded by a locked chain fence, more than a thousand workers toil in a plant that operates around the clock to help U.S. banks catch up to the rest of the world in credit-card security. The owner of the plant, Oberthur Technologies, is racing to meet the banking industry’s demand for new cards embedded with a computer chip in addition to a traditional magnetic strip. The goal: to reduce card fraud by making it harder for thieves to create counterfeit cards. Some 575 million of the new cards—representing about three-quarters of U.S. credit cards and about 40% of debit cards—are expected to be in the wallets of American consumers by year-end, making it the biggest rollout of new cards in decades. Total Return A Chip Card Doesn’t Guarantee Greater Security Why New Credit Cards May Fall Short on Fraud Control (Jan. 4, 2015) Chip card, which have been used throughout Europe, Asia and Canada for years, are coming to the U.S. after delays from banks that issue cards and the merchants who accept them. But challenges remain: Even though tens of millions of new cards have already been shipped to customers, only Wal-Mart Stores Inc. and a few other large retailers so far have upgraded their payment terminals to accept the new plastic. Target Corp. , which had a massive breach in late 2013, has upgraded its terminals and plans to start accepting chip card in the late spring, according to a spokesman. ENLARGE Many merchants are also griping that they won’t meet an October deadline, when the liability for fraudulent transactions will under certain circumstances shift from card-issuing banks. Advertisement Chip card are great A trade group representing tens of thousands of grocers and pharmacies last month asked Visa Inc., MasterCard Inc., American Express Co. and Discover Financial Services to delay the October deadline until 2016, citing backlogged orders for new equipment. It also expressed concern about potential delays in the checkout line during the holiday shopping season because consumers may be confused about how to use the cards, which must be dipped into a reader rather than swiped. So far, the card networks haven’t given any indication they will delay the plan. As an additional complication, some small banks are saying they won’t start issuing the more secure cards until next year at the earliest. Previously MasterCard’s Carolyn Balfany discusses chip-and-PIN technology with Paul Vigna on MoneyBeat. (June 2014) Credit-Card Industry Ramps Up Security Efforts (Sept. 4, 2014) “Some of [the small banks] are struggling with the complexity of it, and the cost is a factor,” said Jamie Topolski, director of alternative payment strategies at Fiserv Inc., which is helping small banks navigate the transition to chip cards. The cards are as much as five times more expensive to make than traditional cards, costing roughly $1 each. Even for small banks, that could be an added expense of tens of millions of dollars, a big tab at a time when they are being squeezed by low interest rates and heightened regulatory requirements. Card-issuing banks hope that the extra expense will be offset by a decline in fraud costs. “We want them, and we hope the benefits outweigh the costs,” said Doug Gulling, chief financial officer of West Bancorp. Inc., which has $1.5 billion in assets. The Des Moines-based bank, which operates 12 branches in Iowa and Minnesota, will start introducing chips on its debit cards next year. The new cards are considered more secure because the chip creates a unique code for each transaction, making it more difficult for thieves to replicate the cards with stolen data. Traditional cards with a magnetic strip contain static data that can be duplicated, including account numbers and expiration dates. Card manufacturers say that they are having a hard time convincing some financial institutions that the cards take longer to make than traditional cards, especially if designs need to be altered to make room for the computer chip that is embedded on the front. “The large issuers are very sophisticated and have been working on this for years, but there are some people that are just scratching the surface,” said Steve Montross, chief executive officer of CPI Card Group, a manufacturer that shipped about 70 million chip cards to U.S. issuers last year. ENLARGE Chip card representation Chip cards represent about 80% of the cards being made these days at the Oberthur plant, which has a capacity to produce 20 million cards a month and is located about 30 miles west of Philadelphia. The company bought the Exton plant in 1999 as part of a plan to gear up for chip-cards production, thinking they were around the corner. “It took a very, very long time, and now it’s happening on an accelerated basis,” said Martin Ferenczi, president of North American operations for Paris-based Oberthur, a printing firm founded in 19th-century Paris that has morphed into one of the world’s leading manufacturers of credit and debit cards. The plant now employs 1,080 workers, up 68% since 2013, and it recently shifted to round-the-clock operations. Security at the plant is tight. Workers who move through different sections of the facility must pass separately through multiple sets of locked doors that can only be accessed electronically with an identification card. The plant was humming on a recent morning as nine rows of cages filled with hundreds of thousands of half-finished credit and debit cards waited for their chips. The nation’s largest financial institutions are ahead of smaller banks in getting the new cards to their customers. J.P. Morgan Chase & Co., the nation’s largest credit-card issuer, has issued more than 19 million chip cards so far and expects to have more than 70% of its credit-card portfolio converted by year-end, a spokesman said. The company has started issuing debit cards with chips in Arizona and Illinois and will be rolling them out nationally over the next few months. Citigroup Inc. has issued more than 12 million chip cards in the U.S., representing more than half of its portfolio. The big bank plans to start issuing chip-enabled debit cards this year, a spokeswoman said.
Accepting Credit Cards by 2015 In the credit card processing world, things are changing, and they are changing somewhat fast. Mostly, we avoid changes because they are not required or needed, however; this change will impact everyone, drastically. Accepting credit cards is an important thing. What change is this? Well, it’s a simple, yet complex change. Its the change from swiping your credit card, to having a”EMV, which stands for Europay, MasterCard, and Visa, is a global standard for inter-operation of integrated circuit cards (IC cards or “chip cards”) and IC card capable point of sale (POS) terminals and automated teller machines (ATMs), for authenticating credit and debit card transactions. Importance of Accepting credit cards According to Wikipedia the definition and explanation of EMV/Chip Card Techonlology in credit cards is “EMV is a joint effort initially conceived by Europay, MasterCard and Visa to ensure the security and global interoperability of chip-based payment cards. Europay International SA was absorbed into MasterCard in 2002. Accepting credit cards is critical to your businesses success. The standard is now defined and managed by the public corporation EMVCo LLC. JCB (formerly Japan Credit Bureau) joined the organization in December 2004, and American Express joined in February 2009. China UnionPay was announced as a member in May 2013, and Discover joined the corporation in September 2013. The EMVCo members MasterCard, Visa, JCB, American Express, China UnionPay, and Discover have an equal 1/6 interest in the standards body. IC card systems based on the EMV specification are being phased in across the world, under names such as “IC Credit” and “Chip and PIN”.” – Wiki Source Technology behind Accepting credit cards This technology is critical for maintaining and keeping charge-backs low. Since the target credit card processing breach and other well known, high popular breaches, we see a need to move into this direction. What does this mean for you as the merchant? It means that you must comply by October 2015 if you do not want to be held liable for your charge-backs. Whats a charge-back? Let me explain, its a dispute to the transaction that you ran for a sale of services/products. If by October 2015, you do not have a chip card reader and accept the credit card in this manner, you will be held responsible for your charge-backs, as they are now responsibly held by the processor who handles your credit card transactions. What does this mean for you? It means that you MUST get a chip-enabled machine immediately to avoid any problems. If you own a jewelry store, sell a diamond ring on credit card to a customer, and they find something wrong with it and or just want to take advantage of you, they can dispute the charge (after October 2015) , and if your customers card wasn’t read through the EMV technology chip cards, and they dispute the transaction, you can say bye the merchandise, and the money. What will happen is your bank account will be debited for the monies in the dispute process. After this, the processor will check how the card ran (must be run chip), if it wasn’t, and it was swiped, you will automatically lose your charge-back rights, and have to forest the product and the money to the customer disputing the chargeback, no matter who’s a fault (you the “merchant” or the customer). Visit us at CPS for Accepting credit cards This blog is written so that you can become aware of these important changes that will impact your business and be able to learn how Accepting credit cards will help your business grow. Since the credit card processing industry has such high turnover, we cannot adequately imagine that everyone will know this information, and be ready for this change. We hope this article spreads throughout the internet so that you may, in fact, understand your rights, responsibilities, and protections when accepting credit cards in your business. For more information: website: www.centurionpaymentservices.com Phone: 305.528.0052