EuroPay MasterCard Visa & Near Field Communication.

The credit card processing industry is about to experience an infrastructure shift. The terminology reads like alphabet soup so we’ll start with a list of the (not so) new technologies. Essentially magnetic swipe readers are going to be phased out and new Chip & PIN cards or chip-based payment cards will slowly replace them over the next few years. The key date on the radar is October 2015.

The Technology Abbreviations:EMV

– Euro MasterCard Visa NFC

– Near Field Communications MSR

– Magnetic Strip Reader EPC

– European Payments Council PCI

– Payment Card Industry M-Payments

– Mobile Payments

The United States is behind the times. It seems that while we were the biggest adopters of magnetic strip reader technology, most of Europe transitioned to chip based cards and some European cards don’t even come with the magnetic strip any longer. Well now we are making a drastic infrastructure change and that is going to impact merchants of all sizes. A word to the wise, if you’re shopping for a credit card terminal, look for EMV & NFC compatible hardware or you will find yourself reinvesting in that hardware by October 2015.

Near Field Communications or NFC is the technology now built into smartphones like the ones manufactured by Samsung, HTC, and LG. The technology, sometimes referred to as a Digital Wallet allows mobile devices to tap their smartphones on an NFC capable terminal to pass credit card information to the terminal for payment. The projected figures on payments using NFC and mobile credit card processing are expected to be in the $Trillions by 2016 as this transition takes place.

EMV cards have a similar technology where a chip in the card allows the card to be tapped or waved over a terminal (within 4cm) rather than having it’s magnetic strip swiped into a credit card reader. The payment cards may also be entered into the machine similar to ATM card readers for contact with the chip enabling it to be read. The new terminals will also have the capability to read third party cards such as medical benefits cards and EBT based transactions beyond standard Visa, American Express, Discover and MasterCard credit card readers.

These payment technologies are ushering in new opportunities that are just beginning to surface such as keyless door entry, data transfer and many more to come. EMV standards have been around for over a decade and now American legislation is set to mandate their use which again, means merchants should be preparing to accepting them. The new standards will come with new codes to determine the status of a transaction and settlement, and equipment manufacturers have begun to implement these as well. What does it mean to those merchants who do not?

Magnetic Swipe Readers will continue to work beyond the October 2015 deadline, however, there will be a shift in PCI compliance liability. Swiped transactions will no longer be the more secure and therefore subject merchant account holders to damages when a breach and fraud occur. The new terminals will also come with locked downloads so that security breaches at the terminal level are thwarted but that means for a merchant to switch to a new merchant services provider will require the previous merchant account provider to supply an unlock code before the merchant can change merchant service providers.