Your Complete Guide to Choosing the Best Chip Card Terminals for Your Business
If you’ve recently shopped at a kitchen supply outlet or stocked up at a big box retailer, you’ve probably paid for your purchases at chip card terminals. Also known as “EMV terminals,” these next-generation credit card terminals reportedly offer security advantages over traditional magnetic stripe readers.
You’re ready to make the investment and purchase several credit card chip terminals for your retail business. But before you make the leap, get the basics on chip card terminals’ advantages, and learn how to choose the right one for your business’ needs.
Chip Card Terminals in a Nutshell
Before delving into chip card terminals, note that the term “EMV terminals” refers to “EuroPay, Mastercard, and Visa,” the companies that developed the chip card technology. Chip credit cards incorporate one of two forms of EMV card security technology.
The Chip-and-Signature function requires the customer to provide a signature to validate the transaction. Conversely, the Chip-and-Pin function requires a four-digit PIN. All United States-issued cards use Chip-and-Signature functionality, and some cards also accept PINs. The card-issuing bank determines the specific card features.
Along with hands-on chip card terminals, Near-Field Communication (or NFC) checkout terminals enable wireless information transfer across very short distances. These “tap to pay” (or contactless) terminals allow you to place your credit card next to the terminal to complete your transaction.
This emerging NFC technology is likely to be a major factor in the credit card processing landscape. In other words, new chip credit card terminals and NFC technology are here to stay.
How Chip Card Terminals Work
In contrast to a magnetic stripe card’s static customer data, a chip-equipped card and its terminal together create a one-time encrypted code called a cryptogram or token. This code can only be used for that transaction, and is virtually useless if a scammer copies it.
For starters, the token must be decoded to confirm that it originated from that individual credit card. Upon the token’s verification, and confirmation of sufficient available credit, the transaction should be approved. Note that chip card terminals provide added security only for card present and point of sale transactions.
Why Merchants Use Chip Card Terminals
Many merchants have switched to using chip card terminals for one overwhelming reason. Simply put, the technology’s one-use code functionality greatly reduces the chances of having your customers fall victim to card-present credit card fraud.
However, chip cards still contain magnetic stripes on the back, and these easily duplicated treasure troves can easily be copied with a card skimmer. Inconspicuous little skimmers fit over a magnetic stripe card terminal, and duplicate the card details when the customer swipes the card. Then, the scammer can go on a shopping spree, or sell the data to another scammer who does their shopping online.
And, there’s a chance that sophisticated card scammers could hack into your chip card terminal. If the thieves do that, they can obtain a customer’s card information, and create a magnetic stripe card containing those details. Then, the criminal can use that fraudulent card in a magnetic stripe reader.
Business Implications of Non-Compliance
So, do chip card terminals really provide better information security? Most of the time, the answer is “yes,” due to the technology’s use of a unique transaction code. However, sophisticated hackers have developed special devices that can breach this security firewall. So, the transaction gets a green light, even though an actual signature or PIN hasn’t been recorded.
And, let’s say you haven’t yet installed chip card terminals in your retail business. As of October 1, 2015, credit card networks and banks will no longer absorb fraudulent transaction costs that could have been avoided through use of chip card terminals. Also, note that several merchant account providers have begun assessing EMV non-compliance charges for businesses that haven’t upgraded their terminals.
So, here’s the bottom line: You’ll be on the hook for the transaction cost, lost merchandise value, and your payment processor’s chargeback fees – for each customer transaction. On a busy sales day, that could run into a substantial amount of lost income.
Chip Card Terminal Brands and Capabilities
If you’re ready to evaluate credit card terminals with chip reader technology, note that popular brands include Verifone, Ingenico, and Square. One popular countertop terminal accepts magnetic stripe and chip card payments, while NFC payments are optional.
Large retailers might appreciate a multimedia terminal that offers magnetic stripe and chip card payments. While customers process their transactions, they can also enjoy audio and video promotional content.
Let’s say you’re ready to accept NFC (or contactless) payments. Consider a terminal that accepts magnetic stripe, chip card, chip-and-PIN, and NFC payments via varied connection methods.
Mobile payment terminal options include a handheld wireless terminal that processes magnetic stripe, chip card, and NFC payments. Audio and video features, and wireless connection choices, make this terminal a good choice for mobile businesses. However, you’ll likely need consistent 3G service to utilize this terminal effectively.
Chip Card Terminal Price Ranges
To determine chip enabled credit card terminals’ price ranges, consider that two kinds of credit card terminals are currently available. First, less-expensive magnetic stripe and chip card readers contain less hardware and an overall simpler design. Of course, you can also get several pricy product enhancements. As a starting point, estimate a $200 retail price for a no-frills chip card terminal.
The second group of terminals supports a trifecta of payment methods, so these machines carry a higher price. These terminals feature magnetic stripe, chip card, and NFC reader capabilities. Adding more features will also hike the devices’ price tags.
While a low-priced chip card terminal begins at $200, prices often range from $500 to $1,000 for a ready-to-go machine. If you want an integrated point-of-sale (POS) terminal, which can enable you to track customer statistics and store inventory, you’ll likely pay thousands of dollars.
Choosing the Right Chip Card Terminals: 4 Tips
Before you begin combing through the chip card terminals’ ads, step back and take four important factors into account. Afterward, you’ll be well positioned to buy the terminals that best match your business’ needs.
Compare the Terminal Cost to Fraud Expenses
If you think you can skate by without a chip card terminal, think again. Even if your business deals in small-ticket transactions, such as coffee and bagels or beauty supplies, you can easily be hit with a fraudulent transaction. And, if you don’t offer payments via chip card terminals, you’ll be on the hook for all of the chargeback fees.
If you run a larger business with higher-ticket transactions, your merchandise will definitely be attractive to credit card scammers. Putting it in perspective, paying for one fraud case can surpass the cost of your chip card terminals.
Match Chip Card Terminals and Business Goals
Choose chip card terminals that complement your business goals. If you want to reinforce your branding experience, for example, select a multimedia chip card reader featuring your brand logos and targeted promotions on colorful touch displays.
Or, let’s say you want to operate more efficiently and get rid of desk-clogging paper receipts. So, buy chip card terminals with embedded signature capabilities. These terminals enable you to store paper receipts electronically while quickly sending them to your customers. As an added bonus, your customers will appreciate the faster checkout times.
Finally, maybe you’ve decided that a mobile store platform makes the most sense. So, consider a mobile chip card reader that meshes with a mPOS system, and enables customers to select their preferred payment option.
Perform Your Due Diligence Before You Make the Purchase
Before you fork over your hard-earned money, ensure that the “super deal” you uncovered includes all the system’s components. Some less-than-ethical vendors advertise the terminal cost while omitting the software and hardware supplies needed to install and operate the system as designed.
Educate Your Store Associates About Chip Card Transactions
Although many consumers are familiar with chip card protocols, show your store associates how to help customers who aren’t up to speed. For starters, employees should be able to tell the customer where to insert their chip card to complete the transaction.
In addition, show your store associates how to complete a “fallback payment transaction.” In this scenario, there’s a problem with the chip card reader, so the cashier must finish the transaction via the machine’s magnetic stripe reader or manual data entry into the PIN pad. Because these less-secure transactions have more fraud potential, employees should know how to pinpoint a fake credit card before the transaction begins.