How Chip-Enabled Cards Can Help Your Business

The U.S. has recently made the move to chip cards, a technology that's already widely used abroad.

Small businesses face a growing risk for various forms of fraud. Innovations in card technology have led to chip-enabled cards that are increasingly being integrated into credit card and debit card programs. Chip-enabled cards, also known as chip cards or EMV cards (for Europay, MasterCard, and Visa), have computer chips in addition to magnetic stripes. They keep businesses more secure because "they add additional security data to each payment transaction and are difficult to counterfeit," explains Randy Vanderhoof, director of the EMV Migration Forum.

"Chip cards make a point-of-sale, card-present transaction much more secure when they are used in a chip-enabled terminal. A chip-enabled card is also more convenient for people who travel internally because the chip has been the standard in Europe and Canada for many years now, meaning these new cards can be easily accepted overseas," says David Smitherman, vice president, retail products & payments at Regions Bank. America's slow embrace of the technology likely explains why the U.S. is responsible for 47 percent of the world's card fraud, even though it only accounts for 24 percent of total worldwide card volume, according to research from Barclays. Barclays also found that when the UK first deployed chip cards, counterfeit fraud was reduced by 70 percent from 2005 to 2013.  

To use a chip card in a chip-enabled terminal, card holders insert their chip card into the terminal and leave it there until the terminal tells them to remove it. If the terminal is not chip-enabled, their card will function like any other through use of the magnetic stripe.

What merchants need to know about chip cards

The added layer of security afforded by EMV technology only works when used with a chip-enabled terminal. Small business owners who want to update their equipment so they can benefit from the new technology should talk to their terminal providers. "Businesses that don't yet accept chip cards may be liable for certain types of fraud as a result of the recent fraud liability shift that took place in October 2015," cautions Vanderhoof. Fraud liability varies by payment network, so contact your acquirer or payment services providers for more information.

"Consumers are increasingly fearful of having their card data stolen, so small business owners that can accept chip cards will be showing their customers that they take their customers' security seriously," says Vanderhoof. But updating to chip technology is not a mandate. As of February 2016, approximately 37 percent of merchants can accept chip cards, according to a survey by The Strawhecker Group (TSG) 2, which included 92 payment service providers that service about 50 percent of the U.S. card-accepting market. Vanderhoof suggests small business owners evaluate "the cost of upgrading to chip versus the potential cost of the risk from accepting non-chip cards."

Even if you are using, and accepting, chip-cards, your business is still not immune to fraud. EMV does not protect card-not-present/customer-not-present (CNP) transactions, such as purchases made online. "Fraud has to be handled on a number of different levels with a number of different tools. No one tool will solve it all. The EMV chip card is another step toward making the transaction space as secure as possible," says David Smitherman, vice president, retail products & payments at Regions Bank, who advises business owners to "be vigilant, train your employees to be vigilant with their card and card information, and, when possible, be sure they use their chip card in a chip-enabled terminal."

For more information, visit, a resource created by the EMV Migration Forum to help educate business owners and their customers about chip cards.


This information is general in nature and is provided for educational purposes only. Regions makes no representations as to the accuracy, completeness, timeliness, suitability, or validity of any information presented. Information provided and statements made by employees of Regions should not be relied on or interpreted as accounting, financial planning, investment, legal, or tax advice. Regions encourages you to consult a professional for advice applicable to your specific situation.