Smart Cards & Point of Sale Terminals......How Will They Affect You?

Although major U.S. banks have been rolling out new, secure smart chip debit and credit cards for months, users have yet to experience the impact of this. Experts say typical consumers will get confused and may even be hesitant when first attempting to use these new smart cards. The new smart-cards contain a PIN (personal identification number) and a computer chip that can be read by a new point-of-sale terminal.

As a result, customers may choose to rely on the less secure magnetic stripe also on the new cards for in-store purchases, or customers may turn to mobile wallet alternatives such as Apple Pay or the upcoming Android Pay. This method will allow them to skip the credit and debit card experience altogether. The PIN and chip concept may be confusing to consumers because they are so familiar with the magnetic stripe method.

Smart cards are much more secure than magnetic stripe cards. According to the Europay MasterCard Visa (EMV) Connection website, there are currently more than 3.4 billion chip cards in circulation that are widely used in 80 countries outside the U.S.

Smart cards are embedded with a computer chip that is read by a new generation payment terminal. As with older cards, payment information is transmitted electronically over a payment network to confirm a customer has available credit or funds in a debit account.

There are a few reasons that consumers might get confused or give up using the smart cards. First, it takes longer by at least a couple of seconds to make a payment with a smart card rather than a magnetic stripe card. Also, the payment confirmation will vary by the type of payment terminal or a store's required payment procedure, which could cause confusion. Some new terminals that are designed to handle smart cards will emit a beep that a transaction is complete, while others will flash a light or a text message on a screen that signals approved. In some other cases, a store clerk will verbally confirm that the payment is complete, which will depend on whether the sales clerk has received proper training. The current deadline for the new smart card is October 2015; however gas stations have until October 2016.

Although the new smart cards may be confusing to users they offer a lot of great benefits. Some of the benefits are the following:

·         Consumers will experience peace of mind knowing that their card information is secure. They will also be able to use cards anywhere in the world.

·         Merchants will realize fewer fraud-related charge-backs due to stolen cards and skimming. They will also increase customer satisfaction with their international patrons. And they will be ready for the future of mobile wallets and other innovations.

·         Card issuers and payment processors will benefit from a reduction in counterfeit card fraud.

Here at Software Solutions, we’ve researched computer integrated EMV readers and in our opinion the market is severely lacking in hardware and software. We’re expecting major issues with vendors such as restaurants. Are you ready for this big change in charging items? How do you think this will affect you when you make purchases?