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Is Your Business Ready to Accept Smart Card Money?

April 15, 2015

By October 2015, most U.S. credit card companies will roll out chip technology in an effort to reduce or eliminate credit card fraud. That’s good news.

American consumers experienced major credit card data security breaches in the past few years, and the numbers are considerable. Home Depot reported 56 million customers’ information was stolen in 2014. Before that, Target announced 40 million customers’ data was at risk after a national data breach. Magnetic strip cards, the standard in the United States, can leave cardholders’ data vulnerable, thanks to easy accessibility.

While not a guaranteed protection against major credit card fraud, chip-embedded credit and debit cards, or smart cards, add a layer of security and protection for consumers and businesses. Some reports show that adoption of smart card technology in Europe reduced credit card fraud by 65-70%. End-to-end encryption makes this technology harder to duplicate, and a signature or PIN number required to authorize a transaction also helps.

A Shift in Technology
A new standard for protection is coming to the United States, but not without a cost. Many of the nation’s retailers are set to adopt the technology by the October 2015 target date. Retailers will be liable for fraudulent activity made on signature-based transactions if they haven’t invested in secure chip technology.

  • Adoption of smart card technology in Europe reduced credit card fraud by 65-70%

The undertaking for nationwide adoption will be hefty and costly. Credit card processing already carries the burden of transactional fees, especially for smaller retailers, and the adoption of new technology will include significant up-front costs. Big credit card companies are stepping up to assist small businesses with card readers. For many businesses, the cost of upfront fees may be worth the leap to minimize the legal and financial liability of failing to implement the technology. Information security is an important investment.

What is Chip-and-PIN Technology?
“Chip and PIN,” “EMV,” “chip and signature,” or technology used in a “smart card,” all reference the same technology—cards or devices, such as Apple Pay or key fobs, that use an embedded integrated circuit. These smart cards boost privacy protection, with authentication, encryption, and secure data storage.

Smart cards add a layer of protection to a cardholder’s confidential information compared with traditional magnetic strip cards. The chip creates an individual code for each transaction, reducing broader risk and theft. The now outdated magnetic strip technology used the card’s data for each transaction. Thus, card information was easier for hackers to duplicate.

Ask about the chip-embedded credit cards Sterling National Bank will be rolling out over the next year. Contact your relationship manager or Client Services at 855.274.2800.