“Smart cards” headed this way — eventually

According to the Nilson Report,  one of the payment industry’s leading newsletters, the United States generated about 27 percent of payment-card purchases though accounts for nearly half of global payment-card fraud.

These statistics were cited in an article syndicated by the McClatchy papers, which states that the U.S. may be more prone to such fraud because it’s been slow to embrace what’s known as “EMV” technology, named for companies Europay, MasterCard and Visa, and more prevalent — ture to its name — in European countries, as well as Canada.

The technology makes use of an embedded chip in the card, which, as the article states, “foil counterfeiters because the chips    transmit different unique numbers to the payment processors each time the cards are used rather than customers’ name and signatures. In Canada, the chips are paired with personal identification numbers to add another level of security.”

What this means is that the cards “aren’t as exposed to data breaches since names aren’t transmitted and thus aren’t in the pool of data that computer hackers often seek.”

EMV may be coming to America after all, however, as American Express will, according to the Green Sheet — another leading industry newsletter — is “begin issuing EMV-compliant cards in 2012 that will support EMV chip and PIN, chip and signature, contactless and mobile POS transactions.”

“AmEx is requiring its merchants to have EMV-equipped POS terminals in place by April 2013. Once the new terminals are in place and retailers can show that 70 percent of their POS transactions are AmEx EMV-enabled, merchants will be released from some Payment Card Industry Data Security Standard reporting requirements.”

Which may be easier for merchants than the alternative, which is that “AmEx is also instituting a fraud liability shift like the ones being imposed by Visa and MasterCard. For certain kinds of transactions, AmEx is imposing fraud liability on merchants who do not adopt EMV by October 2015.”

In other words, change is coming. If you have any questions about securing your purchase information — or what EMV might mean for you — call your AVPS representative!

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