Because of the migration to Europay, MasterCard and Visa (EMV) chipped credit cards, phone payments have become popular. It’s extremely important for businesses to understand the nuances of this migration, so let’s break down a few of the basics.
“Security” in banking is a relative term. The reason all credit cards were moved to EMV chips was to set a standard allowing (National Finance Center) NFC communication. Any iOS or Android device manufactured within the last five years are already designed with NFC chips in them.
NFC technology was initially used to enable wireless charging, but soon, mobile payment options started utilizing the technology as well. Because mobile devices can connect to WiFi, they have inherent security flaws; devices have the ability to access the internet, even when the user cannot. This means that the network owner has ownership of all data being used on the device.
EuroPay, MasterCard and Visa banded together to help keep payment information secure with chips that are manufactured to specific security and encryption specifications. This makes the chip inside the cards more secure than the chips in mobile phones, which instead store data on the device’s internal memory.
Credit chip transaction information is created with a unique encryption code made at the point of purchase; this means that federal fines for stolen transactions and financial information will be levied against the business, not the consumer or even the thief. This unique encryption code is not created when making a purchase with your phone, which is why smartphones might not be the smartest way to make payments.
Apps such as Google Pay, Apple Pay and Samsung Pay are becoming more popular and compatible with the majority of credit cards, banks and merchant card readers. These three are the basic mobile payment solutions, but there are also others out there like PayPal, Chase Pay, Visa Checkout and many more. Mobile payment platforms offer speed, convenience and security over traditional payment methods. So why have many consumers struggled to accept this method of payment? Most like, it’s a combination of lack of consumer interest, sluggish infrastructure adoption and no incentive to change purchasing habits. Even if growth is slow, the more common mobile payment solutions become, the more consumers will be used to the idea of using digital wallets.
If you don’t have an NFC reader at your business, you’re already out of FCC compliance as of October 2015. During tax season, the government actively notes if you are not in compliance with FCC regulations. If this does happen, your business could receive a fine and be held liable for any data that is stolen while out of compliance.
Being out of compliance is the equivalent of leaving your business doors unlocked and the cash register wide open while employees are on break. Anyone could walk in and steal whatever they want. Now’s the time to get compliant and install NFC readers to allow encrypted financial transactions. Otherwise, because your business is now liable, you could see plenty of chargebacks due to fraudulent purchases.
If you have more questions about payment options, contact our POS experts for more information.