Chip vs. EMV FAQs
What is the proper way to process an EMV transaction?
In order to process an EMV or Chip transaction properly, the customer must insert her card into the EMV slot on the terminal with the chip card entering first and face up. The card must be left inserted throughout the duration of the transaction. An approved authorization must be obtained and a signature from the customer/cardholder must also be obtained. The merchant must compare the signature on the sales slip to the signature on the reverse of the credit card used to purchase the goods or services. If the signature is not on the back of the card, you must request another form of identification that includes a signature and make that comparison. If the signatures do not match, you should consider rejecting the transaction.
What does EMV and NFC mean?
EMV is the technology that allows merchants to take the new, safer chip cards. The chip on cards will be dipped in a terminal as opposed to swiping the magnetic stripe. Starting in October 2015, merchants without EMV enabled terminals will be liable for any counterfeit charges. NFC allows merchants to accept contactless payments from their customers' mobile wallets on their smart phones or enabled cards. NCR Payment Solutions is committed to ensuring merchants are able to process secure payments of all types. We offer an all-in-one solution to ensure compliance in payment acceptance.
What is a fallback transaction?
The payments industry is observing an extremely high rate of fallback transactions coming from newly deployed EMV enabled devices. A fallback transaction normally occurs when a chip card, presented at a chip terminal, cannot be read due to a technical issue with the chip which results in the technology "falling back" to a magnetic stripe transaction. This situation is not expected to occur frequently since the chips on the cards rarely fail. In some situations, a fraudster may create a counterfeit card with an intentionally damaged chip in order to invoke this scenario. For this reason, fallback transactions are deemed risky by the payments industry. Since the issuer holds liability on fallback transactions, they may choose to decline them when they are sent for authorization. According to the payment networks, a fallback rate of over 2% at one particular merchant or merchant chain is indicative of a problem. The problem may be procedural or related to incorrectly configured POS terminals. Fallback rates over 50% and, in some cases, 100% have been observed in the U.S. since the October liability shift. A combination of POS entry mode, card service code and terminal entry capability (TEC) is used by the issuer to determine if a transaction is fallback or not.
What is Near Field Communication (NFC) and how does it work?
NFC allows two equipped devices that are placed near each other to exchange bits of data. For this to work, both devices need an NFC chip. These transactions are considered safe because it creates a unique digital signature. NFC technology makes it possible to use your smartphone to pay at NFC enabled terminals.
Why is it important that my terminal or point of sale system be EMV enabled?
EMV acceptance became mandated in the US in October, 2015. If an EMV card is presented for payment and it is not processed as an EMV transaction by dipping the card into the terminal, as the merchant, you are financially liable for counterfeit chargebacks on those types of transactions. It is very important that you have an EMV terminal or point of sale system that is EMV enabled to avoid this very real liability. Issuing Banks are actively transferring this liability to merchants through the chargeback system. Contact NCR Payment Solutions at firstname.lastname@example.org or your relationship manager to upgrade your terminal or review point of sale options.