EMV Technology and Credit Card Donations
July 01, 2015
By Jeff Holt, CPA
There is now a new cost element for nonprofits who accept donations in person via credit card, and it relates to a credit card chip technology called EMV. EMV is an acronym for Europay, MasterCard, and Visa; the U.S. will be migrating to this credit card standard in October 2015. EMV is the global base standard for credit and debit card chip technology, in which a tiny chip on the actual card stores personal data as opposed to a magnetic stripe. So instead of being ‘swiped,’ the card is inserted and the chip is read.
Not-for-profits need to understand how this change in technology will affect the way they accept and process credit card payments, as this may open themselves up to liability for fraud.
While the October date isn’t a hard date for implementation, the date is firm for a shift of liability from the issuer (MasterCard, Visa, and American Express) to the not-for-profit for non-EMV credit card-present transactions. When an EMV enabled card is presented to a not-for-profit that only has the old “swiping” technology instead of EMV technology, the not-for-profit is likely to be responsible to cover the cost of a fraudulent transaction if they used the old technology to read the card.
By the way, this doesn’t apply to online transactions as there is no terminal to read the chip when making a donation online. This is termed a “card-not-present” type of transaction.
The impact is that the not-for-profit, who receives significant donations via card-present transactions, may need to evaluate whether it is worthwhile to invest the time and dollars to upgrade its equipment to implement the EMV technology. With regard to the potential for prevention of fraudulent transactions in online transactions, the not-for-profit may want to look into an address verification system or other authentication methods.