Independent software vendors (ISVs) that integrate payments into their solutions must anticipate the different ways their clients accept customer payments. Businesses that focus on e-commerce and phone orders will require card-not-present solutions, while those that transact in-person will need card-present solutions. And some businesses will require a hybrid model that supports both. All businesses must implement card acceptance programs that streamline customer transactions and reduce the risk of payments fraud.
In the past decade, one of the most significant developments designed to reduce fraud for card-present payments is the mass issuance of EMV® cards, commonly known as chip cards. As opposed to a quick swipe of a magnetic stripe, chip cards work differently. They are dipped into an EMV card reader and left for a short amount of time so the chip can generate a dynamic token unique to each transaction. As opposed to static information stored on magnetic stripes, these unique tokens can’t be stolen and used to make fraudulent purchases.
Chip card issuance gained momentum in response to the 2015 liability shift that moved responsibility for fraudulent transactions to merchants when chip cards were presented for payment but not processed using EMV. According to Visa, the shift to EMV resulted in a 76% drop in card-present counterfeit payment fraud from 2015 to 2018. As chip card issuance continues to expand (it’s estimated there are over 1 billion EMV credit cards and debits cards in the US now), this number is poised to drop even further.
ISVs that integrate EMV card readers to their software provide clients two additional benefits in addition to fraud mitigation. First is that EMV transactions tend to qualify for the most favorable interchange rates and are less susceptible to downgrades that can result in unnecessary fee increases. Second is that EMV card readers, when integrated correctly, can reduce the scope of PCI DSS compliance for merchants.
Integrating EMV card readers can be simple, safe, and cost-effective with the right integrated payments partner. The cost of buying new payment terminals can add up quickly, but some payments partners will provide free EMV payment terminals to qualified ISVs.
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