All too often I find merchants to be rather lax on asking for identification to verify cardholder matches to government issued ID. Yes, you can ask for such and yes the customer should provide. If they cannot provide, then you have a right to deny the purchase being made. You are simply protecting your business and verifying the cardholder. Nothing illegal in regards to that denial if appropriate verification cannot be rendered!
Chip cards, which are called EMV, are coming into our market and some of you might already have 1 or more in your wallet today. The basic elements of chip card technology are the added layer to authenticate a transaction at the counter.
Since we are talking about a chip being embedded into the front of the card, that chip will have some basic programming in it. As the EMV rollout is set to begin on October 1, 2015 – with POS terminals being able to read the chip, the customer dips card in and signs the receipt. The card associations have developed a fraud layer on chip read transactions basically shifting the liability from you the merchant back to the cardholder if it was a chip read transaction. Now while that sounds great – the full value of EMV transactions will be delayed. The delay is getting consumers to adapt to the chip cards and use it in a proper manner. The essential value of chips is similar to pin debit cards. In the near future, rather than simply chip and sign for a receipt, a customer using a chip credit or debit card will need to enter a pin number to authenticate the sale. Now in doing that step, the verification has been rendered; cardholder should be only one to know pin number. A stolen card, the thief would never know the pin. A fraudulent or unauthorized transaction will not be born on the merchant but rather back to the cardholder.
While it sounds great, it will take time to fully rollout here in the U.S. During that time, consumers will have to adopt and understand how to use the cards. Card issuers had to re-issue cards to make sure all card products had the EMV chips.
It may take the U.S. more than 5 years. We are talking now to the next 5 years, so back to how I started this article, reducing fraud at the countertop. You need to take steps now and not assume EMV will be the protection layer for your business.
The simple aspect here is perception and getting over it. Americans are familiar with providing ID with card transactions in certain venues. Hotels generally require it for check-in. In high tourist destination spots, merchants will ask for ID with a card transaction. So it isn’t all that uncommon.
The greatest challenge for you is to get your staff to adapt to asking for ID with card transactions. They like the path of least resistance. Not knocking employees but it is simple – they have little risk if the business loses income on a sale. You’re the one that has to balance the books and make sure the ROI is in your favor. So with that said – it’s a matter of training them and saying its business policy, we verify card transactions and make sure the authorized cardholder is making the purchase.
If you do the simple step of verifying card name to government ID details, it will go a long way to reducing or possibly eliminating fraudulent sales at the countertop. Now if you ask – Joe your talking at the countertop but I have a mail order and Internet practice, how does ID help in that manner? It doesn’t! You can ask for a photo of the government ID but the same protection layers do not exist for transactions that are not considered at the counter. That alone is a separate article, which no doubt I should cover next time!
Concluding here – EMV will help down the road but be more protective in how you handle business today. As I experienced in the Caribbean, the merchants might live in second to third world markets but they run their business first world, which at time I feel our merchant base here in the States operates in a third world manner at times. SVBS
Joe Radest started his career in card payments in 1998 working for the industry giant First Data. Since FDC, Joe has worked with other notable processors – TSYS, Global Payments and Chase Paymentech. Nearly 3 years ago, Joe branched out on his own; providing complete end to end business process management and secured payment technology solutions, which affords business clients the ability to securely transact payments without having sensitive data touching their environment. He can be reached by phone at 770-731-0414 or by email at [email protected]