What you need to know about EMV chip cards.

May 23 2018 | PayPal editorial staff

EMV—which stands for Europay, MasterCard and Visa—is a global standard for cards equipped with special computer chips allowing for better protection against fraudulent in-person card transactions.
European banks have been issuing credit cards with chips for years. Finally, the US is catching up. (As a business, no doubt you've seen them already—you might even have a chip card reader.) First introduced in the United States in 2014, the chip cards will rapidly become the new standard in card processing. By the end of 2016, the vast majority of all credit and debit cards issued in the US (about 76%) will contain an EMV chip. By the end of 2018, it is expected that over 98% of all cards issued in the US will be chip cards.

What does that mean for you as a business owner? Well, a lot. Below is some information that will help you learn what is required of you as a business, and when.

Out with the old (mag stripe).
Before the introduction of the EMV chip, all card-present transactions used a magnetic stripe (a.k.a. mag stripe) on the back of the card. Swiping the card through the terminal allowed the payment gateway to read and transmit the credit card account information, which is encoded on the stripe. With the mag stripe cards, any fraud was usually assumed by the issuing banks, as the fraud controls were relatively sparse, relying mainly on a comparison of the signature on the card against a signed receipt by the merchant.

In with the new (EMV chip).
With the new EMV chip-enabled cards (a.k.a. chip cards) a special silicon chip is embedded into the plastic. When used in card-present transactions (where you take physical possession of the customer's card to process the transaction), the chip creates a single-use, unique transaction code. This code is sent to the issuer where it is verified, allowing the transaction to proceed.

Chip-and-signature vs chip-and-PIN processing.
There are two different methods of processing a chip card transaction: chip-and-signature and chip-and-PIN. Both require the chip card to be inserted into the card reader and use the chip's unique transaction code. Chip-and-signature cards still require a customer's signature on the receipt, and businesses are advised to continue to check the signature against the one on the card. Chip-and-PIN processing adds another level of protection by requiring a customer to enter his PIN code into the card reader.

Chip-and-signature processing is currently being used in the U.S., while chip-and-PIN processing is done in Europe. However, there have been some signs from the associations that the US will eventually transition to chip-and-PIN processing, as well as interest from retail associations for PIN authentication.

Chip-enabled card readers.
As we mentioned above, all chip cards require the use of new card readers. These new readers have a slot in which the customer or merchant inserts the chip card. Unlike mag stripe cards, which are quickly swiped, the chip card remains in the reader throughout the entire transaction, transmitting the unique approval code request and receiving approval to proceed with the transaction.

Chip card readers, such as the PayPal Chip Card Reader, are backwards compatible, meaning that you can continue to process traditional mag stripe cards. You can also process NFC (Near Field Communications) payment options, such as Apple Pay®. An added benefit of the PayPal Chip Card Reader is that it helps you future-proof your business: it has a PIN pad, so that once the US does move to chip-and-PIN processing you'll be good to go.

EMV cards and fraud.
In an effort to spur businesses to transition to EMV chip card processing, MasterCard, Visa, Discover and American Express began in October 2015 to shift the liability for any card-present fraud to whichever party is the least EMV-compliant in a fraudulent transaction. What does that mean? It's a bit confusing but fortunately, it's a very specific case: if someone puts a fake EMV chip on a credit card, and shops in your store and you swipe that card (as you do with current mag stripe cards) instead of inserting it into the chip slot, you could be on the hook.

The upside to this is that chip cards are more secure than the old-fashioned mag stripe cards, curbing the potential for fraud (and hopefully, associated costs) for all parties involved: for the issuer who approves the transaction, the network that routes it, the merchant who processes it, and the consumer who initiates it.

To learn more about how PayPal can help you jump-start EMV card processing, visit http://www.paypal.com/emv today.

 
The contents of this site are provided for informational purposes only. You should always obtain independent, professional accounting, financial, and legal advice before making any business decision.

Frequently asked questions.

You received a new PayPal Business Debit Mastercard that is now chip enabled for added security. PayPal is providing the chip cards at no charge to provide you better service and increased security. The EMV microchip, located on the front of your card, provides enhanced security features that help protect against fraud. The chip is extremely hard to duplicate or copy, which greatly reduces the opportunity to counterfeit the card. Your new card also supports contactless, NFC (Near Field Communication), and the traditional magnetic stripe.

Your new PayPal Business Debit Mastercard enables you to insert, tap, or swipe your card depending on the type of terminal your merchant uses. Your new can be used everywhere Mastercard is accepted.

If your card is lost or stolen, call 866-888-6080. We’ll immediately disable the card and issue a new chip enabled card for you.
 
Lavu is the creator of the Lavu POS software application, a full-featured restaurant point of sale (POS) system for the iPad. Lavu was founded around the idea that technology can be used to offer restaurant owners and managers a POS system designed specifically for their needs.

Lavu has integrated with PayPal’s Chip Card Reader to ensure every Lavu + PayPal account is EMV compliant. Accept chip cards, contactless payments like Apple Pay, and magnetic stripe cards all from one device.

To link your PayPal and Lavu accounts:
  1. Signup for Lavu by going to  www.lavu.com/paypal and clicking Lavu + PayPal Free Trial.
  2. Once you have signed up go to the Web Control Panel on your Lavu account and click Get Started.
  3. Use an existing PayPal account or create a new PayPal account.
For assistance you can call PayPal Telesales at 844-353-0786.
PayPal offers PayPal Here card readers to suite your business:

PayPal Here Mobile Reader ("PayPal Here Swiper")
  • Accepts all major credit and debit magnetic stripe cards
  • Plugs into the audio jack of your mobile phone or tablet
  • Compatible with most iOS, Android, and Windows mobile phones and tablets
  • Ideal for smaller transaction sizes


PayPal Here Chip Card Reader ("PayPal Here EMV Reader")
  • Accepts all major credit and debit magnetic stripe cards, chip cards, and contactless payments
  • Compatible with most iOS and Android phones and tablets
  • Connects wirelessly via Bluetooth to the PayPal Here app on your compatible phone or tablet
  • Ideal for on-the-go and in-store payments


PayPal Chip and Swipe Reader
  • Part Number: PCSUSDCRT
  • Package includes: Chip and Swipe reader, device clip, and micro USB charge cable
  • Accepts all major credit and debit magnetic stripe cards, chip cards, and Samsung  Pay.
  • Compatible with iOS and Android phones and tablets.
  • Connects wirelessly via Bluetooth to the PayPal Here app on your compatible phone or tablet.
  • Comes with a clip that attaches the reader to your phone or tablet for easy transport.
  • Ideal for on the go payments.

PayPal Chip and Tap Reader
  • Part Number: PCTUSDCRT
  • Package includes: Chip and Tap reader, device clip, and micro USB charge/data cable
  • Available separately: The Chip and Tap Charging Stand, so your reader charges while in use
  • Accepts all major credit and debit magnetic-stripe cards, chip cards, Samsung Pay and contactless payments like Apple Pay.
  • Compatible with iOS and Android phones and tablets.
  • Connects wirelessly via Bluetooth to the PayPal Here app on your compatible phone or tablet.
  • Comes with a clip that attaches the reader to your phone or tablet for easy transport.
  • Ideal for on the go and in store payments.
Chip and Tap Charging Stand
  • Keep your PayPal Chip and Tap reader fully charged while taking  payments  all day.
  • Heavy weight base and rubber pad helps keep your charging  stand stable on countertops.
  • Easily insert your reader to use it in store or remove it to get paid on the go.
  • Includes a locking screw to secure your Chip and Tap reader to the charging stand.
  • For greater stability and added security, remove the rubber pad and attach the stand to a table or counter using the installation template  included  with the quick start guide.
  • Charging cable is not included.
  • Use any standard USB to micro USB cable. Works with third-party USB wall adapter
*Activation occurs when you pair your Chip Card reader to a mobile device with the PayPal Here application installed on it and complete a PayPal Here payment transaction. Additional terms and conditions apply.
 
To locate authorized retailers that carry the PayPal Here mobile card readers, please visit www.paypal.com/locator.

The PayPal Here app for smart phones or tablets is available in Apple's App store and the Google Play Store.

Visit our Resource Center to find what you need to successfully manage and grow your business with PayPal Here.
If your PayPal mobile card reader isn’t working, here are some things to try:
  • Make sure the PayPal Here mobile card reader is compatible with your phone.
  • Launch the PayPal Here app before using the mobile card reader.
  • Make sure the mobile card reader is firmly plugged into the audio jack, and that the phone case isn’t in the way.
  • Slide the front right corner of the reader down so that it locks onto your phone.
  • Make sure the volume is turned all the way up, the mic is turned on, and your phone’s Location services setting is turned on.
  • Swipe cards slowly, in one continuous motion.

If your new PayPal Here chip card reader is having issues connecting via Bluetooth to your phone, please ensure you follow the pairing steps:
  • Turn on the Chip Card reader. If you are pairing for the first time, make sure to enable Bluetooth on your phone or tablet. Once enabled, the Bluetooth icon will blink quickly.  
    • On Apple devices, your Chip Card reader will automatically appear
    • On Android devices:
  1. Select Scan.
  2. Select the PayPal Here Chip card reader which matches the number on your card reader screen.
  3. Open the PayPal Here app.
The reader will automatically connect.

For more ‘how to’ videos for the chip card reader, go to www.paypal.com/emv.
 
Visit our Resource Center to find what you need to successfully manage and grow your business with PayPal Here.