A smart card reader is how you swipe, or rather “dip,” to purchase something with an EMV credit card (or chip card). It looks almost exactly like a traditional credit card terminal or swiper, but it’s specifically designed to read chip cards.
Credit card companies have seen the light. They are currently transitioning all American consumers’ credit cards to smart cards in order to reduce fraudulent transactions and keep people’s personal financial information more secure.
What are smart cards?
A smart card is a credit card which looks and is used in almost the exact same way traditional magstripe cards are used.
The only difference in appearance between traditional magstripe cards and smart cards is smart cards have a microchip embedded on the front left of the card. These microchips look very similar to the SIM cards we all have in our mobile phones and are about the same size.
What do they do?
If you aren’t familiar with how credit cards work, here’s a quick lesson. The magnetic stripe on the back of your credit card stores all of your sensitive information about your credit/bank card account. When it is swiped through a credit card reader, the information is used to verify the account is valid and to authorize the customer’s purchase.
Unfortunately for all of us, the information stored on those magnetic stripes isn’t as secure as it should be and there are a lot of bad people out there who have devised ways of copying information.
Because the information stored on the magstripe cards never changes, criminals can use it over and over again. Once they have it, they can use it for whatever fraudulent purchases they choose until the customer finally realizes what is happening.
The difference with smart cards is all of the account holder’s personal information is stored in the microchip. Every time they use it to buy something, it creates a unique transaction code which cannot be used again.
Would be criminals can’t duplicate the information used for the transaction.
Customer’s have a PIN number known only to them which they enter to “turn on” the card for purchases. This is the safest way to use smart cards because no one else knows the smart card user’s PIN number but them.
For the time being, a signature can also be used as a secondary method for verification if there isn’t an option for entering a PIN number.
Smart/chip cards which are being introduced in the United States still have the magnetic stripe on the back of the card and can be used the traditional way as well.
So what does all this mean for you?
It means you need to go get a smart card reader for your business! In fact you should have had this done by October 1st, 2015. Having a smart card reader makes you EMV compliant which means you are not liable if a fraudulent card is used in your store.
The United State is the last major market to transition to smart credit cards but they’ve already issued hundreds of thousands of them to their account holders and plan to be fully transitioned within the next few years.
Most smart card readers look almost exactly the same as non-smart card readers do, with one small difference. In addition to the card swiper, PIN pad, and signature screen smart card terminals have a small slot built into the front of the reader.
If a customer wants to use their smart card to buy something at your place of business, they simply insert their smart card into the slot. Once it is fully inserted, the microchip communicates with the issuer’s financial institution to verify the user’s account.
The customer enters their PIN number and the microchip is “turned on” and creates an encrypted code for the transaction. As we already stated earlier, the code created is unique and can’t be used again.
Smart card readers can accept any form of smart card. As long as they have a microchip embedded in them they will accept the card as a form of payment.
There are other smart cards which are used for various other security measures. Some smart card readers attach directly to computers or laptops via a USB port and can be used for secure logins.
Other smart cards are for personal security verification. In Germany, every citizen has a smart card associated with their health insurance and is used every time they need medical care.
It’s time to get on the ball. There’s no going back to the traditional cards and readers. Your customers (and you) will have these smart cards within the next few years. And you’re currently required to be EMV compliant. So you need a smart card reader, stat!
Learn more now by calling (888) 510-9871 or visit www.redfynn.com.