In 2015, the United States saw a major shift in consumer payment methods from traditional magstripe cards to EMV-chip cards. This transition is referred to as the EMV liability shift. With the majority of U.S. consumers now paying with chip cards, the next wave of technology is about to roll out: contactless payments.
In 2017, major card brands started issuing EMV-contactless cards to consumers in anticipation of this upcoming payment-culture change. Businesses processing credit cards should be prepared for this change as more and more consumers opt for EMV contactless payments. Before we jump into the why, let’s go over how an EMV card reader works.
How an EMV Card Reader Processes EMV Contactless Payments
An EMV card reader uses near-field communication (NFC) technology to process an EMV-contactless payment. This is the same way payments are made through Apple Pay or with a Fitbit.
Once an EMV-contactless card enters the magnetic field of a card reader, its data is read by the device via an antenna embedded in the card. During the transaction, a code unique to the card and the transaction is created, which is later decoded and validated by the bank.
This is in lieu of inserting the chip-enabled card or swiping the magnetic stripe in the card reader. It’s important to note that an EMV contactless card is more secure than one with just a magnetic stripe. This is because with magnetic stripe contactless cards the data is only scanned by the EMV card reader, whereas with EMV contactless cards there is an exchange of information between the card reader and card, in addition to data scanned.
Why Your EMV Card Reader Should Take Contactless Payments
- More consumers are carrying EMV-contactless credit cards. Card brands are doing their due diligence to bring card holders’ wallets up to speed with the latest technology. Visa projects that by the end of 2019 over 100 million Visa contactless cards will be issued in the United States.
- Contactless payments mean speedier check out. Dipped EMV card transactions can take up to 22 seconds with a slow EMV card reader. Contactless payments take significantly less time than a typical chip-insert transaction. Taking into consideration the time waiting on the prompt to remove your card and sign for the transaction, an EMV contactless payment may even be quicker than the fastest dipped EMV transaction.
- It's convenient for everyone involved in the payment process. Card holders can leave their EMV contactless cards in their wallets to make the payment — no need to remove the card and insert it. Cashiers can be hands off while the EMV card reader does it’s work. With the right EMV card reader, the card holder is prompted to sign and choose their receipt option automatically.
As you consider changes for your business at the start of the new year, take a moment to reflect on your credit card reader. Do you even have the option to accept EMV-chip cards yet? Have you noticed customers looking for the contactless symbol on your terminal? What may seem like minor inconveniences for customers will make a huge difference in both your business’s security and your customers’ perceptions moving forward.
Even if your customer base seems to be behind the trend of EMV-contactless payments, it is only a matter of time before their card issuing banks replace their current cards. Get ahead of the times with an EMV card reader that takes contactless payments.
Do you have any questions about EMV contactless payments or EMV card readers? Add a comment below. We’d love to be a resource for you!
Editor's Note: This post was originally published in January 2019 and has been updated for comprehensiveness and accuracy.