Not long ago, businesses were processing credit cards with a carbon copy imprinter. Since then, the payment processing industry has taken major strides in advancing its technology, and it’s only changing quicker these days.
The combination of smarter card reader technology and crafty fraud tactics means more shifts in credit card processing equipment for businesses to consider. Here, we outline three trends for businesses to keep in mind as they invest in newer (and more expensive) readers:
Card Readers Must Be EMV Capable
By now you’re likely aware that mag-stripe cards are getting phased out and EMV-chip cards are being issued to replace them. With U.S. chip card adoption predicted to reach 90 percent by 2020, having an EMV-certified card reader is a must for businesses processing credit cards.
So, businesses just need to upgrade to an EMV-capable card reader if they haven’t already. Easy, right? Wrong. What complicates this seemingly simple fix is that EMV-certification is difficult to get. Some providers may advertise their card readers as EMV-ready, but in reality they have yet to achieve EMV certification.
Without an EMV-certified card reader, businesses put both themselves and their customers at risk. Falling back on old mag-stripe technology creates major security gaps to combating fraud and detecting counterfeit cards. Failing to utilize an EMV-certified card reader also puts your business at risk for bank-initiated chargebacks. If you process chip cards by swiping instead of inserting the card, banks may issue a chargeback on behalf of the cardholder, which you will lose by default.
Chip and PIN Is on the Rise
When the U.S. started adopting EMV technology, signature authorization was rolled out due to its familiarity. But signatures are easy to forge, and with how effortless it is to get someone’s information nowadays (including a copy of a signature), PIN is starting to replace signatures for in-person, EMV transactions.
Card issuers have triggered this change by issuing chip-and-PIN cards to consumers. So, what does this mean for your business? That’s up next.
Customer-Facing Card Readers Will Be Required
Despite the rollout of EMV chip cards, most readers are still situated in the traditional fashion: behind the counter, facing the cashier. With chip and PIN on the rise, future card credit card readers need to be customer facing to allow cardholders to enter their PIN numbers in privacy and out of the cashier’s view. You’re probably thinking, ‘Well why can’t cashiers just turn the card readers to face the customer?’
Though most EMV-capable readers have a PIN pad built in, the technology running the readers may not have the ability to process chip and PIN. Sophisticated providers can remotely update their card readers so businesses aren’t forced to upgrade and pay for yet another card reader. However, not all providers are equal.
Additionally, contactless payments with mobile wallets like Apple Pay and Google Wallet are increasingly popular among consumers. Traditional terminals situated behind the counter won’t accommodate these payment types, either.
Be Prepared For the Future
Do your due diligence when choosing a card reader for your business. With more advanced technology, readers are getting costlier and should be treated as an investment for your business. Research different options, what each offers now and what they can offer in the future. Taking the time to make a smart decision on a card reader now will only benefit your business later.
Are you already facing issues because you have an older card reader? Tell us your story below, we’d love to hear from you. You may just help a fellow business owner in the process!
Editor's Note: This post was originally published in August 2018 and has been updated for comprehensiveness and accuracy.