Credit Card Processing Blog

EMV Chargebacks Cutting into Your Profits?

September 22, 2016 12:00 PM / by Reliance Star

Since the implementation of the EMV chip credit card system on October 1, 2015, responsibility for fraudulent charges has shifted from the card issuer to the merchant, if the merchant is unable to process EMV cards. Customers love the new EMV cards for the added layer of security they provide in making it vastly more difficult for fraudsters to steal and utilize their credit card data. With a chip card, no customer data is actually stored in a merchant’s computer system. Instead, the data is stored in numerical packets that provide no relevant information to potential thieves. 

If your business has not yet upgraded to this new technology, you are opening up your customers to increased financial risk. This can result in losses for your business as you are forced to refund your customers’ money for fraudulent purchases made using their credit or debit cards. Beyond that, it may cost you even more money in the loss of future business as those customers turn to your competitors who do offer the more secure EMV credit card processing. So what can you do to combat EMV card fraud? Read on to find out.

Upgrade Your System

Without question, the best way to prevent EMV card fraud is to upgrade your current payment processing system to give your business the capability to process EMV cards. Fraudsters can easily copy the magnetic strip from someone else’s credit card to use for themselves. However, if that credit card was equipped with an EMV chip, that data would still be included in the magnetic strip. Then, if you attempt to process the fraudulent card, your system would alert you that it needs to be inserted into the EMV chip reader. 

Since EMV chips are virtually impossible to replicate, you would notice that the fraudulent card either does not have an EMV chip or that the machine is unable to read it. You would instantly know not to accept that card, as it is most likely fraudulent. Although EMV chip reader technology does require some financial outlay to get set up initially, the investment is well worth it in the long run, thanks to the money your business will save on EMV chargebacks and potential lost business.

Other Fraud Prevention Methods

If your business is unable to make the switch at this time, there are still other ways you can work to prevent EMV card fraud. When a customer is using a credit card, always ask for identification, and make sure that the name and signature match. Check the last four digits of the card number on the receipt as well to ensure that they are the same as what is on the card. 

Be especially careful when a customer is attempting to make a large purchase or attempts to use multiple cards. These are all warning signs of potential fraud. It is important to be particularly aware in areas that receive a high volume of tourists, as they are often targets of credit card fraud. Large metropolitan areas and college towns are other hot spots for potential risk. 

As technology continues to advance, thieves and fraudsters are finding the need to become increasingly sophisticated in their methods. As credit card fraud becomes more difficult, they are likely to start targeting businesses that have not yet made the switch to EMV processing, as they will be easier to defraud. It is in the best interests of your business to upgrade to the new system as soon as possible for the best chance at preventing this type of fraud in the future. In the end, it is best to err on the side of caution, rather than opening up your business to unnecessary risk.