Bank helping merchants convert to new EMV payment system

Coastal Community Bank is helping its merchants prepare for the upcoming implementation of the new Europay, MasterCard and Visa (EMV) system, a fraud-reduction technology set to go live on Thursday, Oct. 1.

Coastal Community Bank Merchant Services Specialist Stacey Reynolds provided Sky Valley Chamber of Commerce members with an overview of the EMV technology during a recent chamber meeting. While the new technology has a more significant impact on merchants, consumers need to be aware of it as well, since new bankcards incorporating EMV standards will be issued by the end of the year.

"EMV is a fraud-reducing technology to help protect your business against counterfeit, lost or stolen credit cards,GÇ¥ Reynolds said.

EMV bankcards, which are already in use, are embedded with a "smart chipGÇ¥ microprocessor, which is scanned during in-person, point-of-sale transactions. Merchants need to acquire updated card readers that are equipped to read the smart chips by Oct. 1. The smart chips enhance and heighten bankcard security by adding numerous layers of security measures. -á -á

"As we sit today, we have the magnetic strips. Those are as old as the first computer and they're very easy to duplicate,GÇ¥ Reynolds said. "That's why fraud is at an all-time high.GÇ¥

The new EMV specifications were created by Europay, MasterCard and Visa, and have been implemented across Europe.

"It's only when someone hands you a card; it's not if there's a credit card transaction done online or on the phone,GÇ¥ Reynolds said. "The merchants will need to have the technology to process those cards by Oct. 1.GÇ¥

The Oct. 1 deadline could have a significant impact on merchants unequipped to process the new smart chip technology because it entails a liability shift. Currently, if a traditional non-EMV, magnetic-strip credit or debit card is used fraudulently at a non-EMV, magnetic-strip terminal during a point-of-sale transaction, the liability generally falls on the issuing bank, not the merchant.

This scenario will not change after Oct. 1; if neither the issuing bank nor the merchant has implemented EMV, and a fraudulent transaction is made, the liability will still fall on the bank.

But, if a bankcard with a smart chip is used fraudulently at a traditional non-EMV, magnetic-strip terminal after Oct. 1, the liability falls on the merchant, said Reynolds, which didn't happen in the past.

"That's the first time ever,GÇ¥ Reynolds said.

Merchants need to upgrade their terminals by Oct. 1, to prevent liability in the case of fraud. Once a business owner has upgraded their technology, the scenario works the same way that it works now; after Oct. 1, if a smart chip bankcard is used at a smart chip-enabled terminal, and the transaction is fraudulent, the issuing bank will be liable.

Certain types of transactions will be exempt from the Oct. 1 liability shift, including pay-at-the-pump fuel, ATM and card-not-present transactions. According to Coastal Community Bank, the liability for automated fuel and ATM machine transactions will not shift until October 2017.

Coastal Community Bank has branches in Monroe and Sultan. For more information about Coastal Community Bank, visit www.coastalbank.com.