Chip Cards & Manual Payment Processing

You might recall a few years back all of our debit and credit cards were replaced and are now required to have 'chips' in them which made us have to start inserting our cards instead of swiping them. The reason for the change is that the chip generates a unique code for that payment and two codes are never the same and the chip does not link back to any personal information.


The black strips on the back of our cards that we swipe uses the same information for every single transaction making it A LOT easier to hack your information as the strip links back to your personal information with the bank (not a lot, but enough) and by mirroring the strip, it can be reused over and over and over again, whereas a chip card is very hard to hack and cannot be used over and over.



There are still situations where we have to swipe our cards and I'm sure you have heard of ATMs or gas station terminals being risky due to the card reader being able to have a "dummy" card reader placed over it which captures all of your information from the strip for those hackers to then fraudulently use your debit card information.


Note: Always inspect independent card readers to see if there is a dummy reader placed over the real one and look for tiny cameras. Legit ATM cameras are not ever pointed at the keypad to see you entering your pin, they are pointed at you. So if you see a camera that is pointed at the keypad, do not use that ATM.





Although using the chip on your card can be annoying, and loud, (like wtf does it have to be so loud when it tells you to remove your card???) there is a very good reason for it. So suck it up buttercup.


Now, let's talk about manual payment processing -- I am going to talk about when you are manually entering a customer's credit/debit information when they are in-person with you -- not inputting it in your bookkeeping system to set up an ACH and recurring payments.


Now that we have stricter regulations and chip cards, manually entering credit/debit card numbers comes with A LOT of risks, ESPECIALLY if you are getting the card information over the phone and processing it on your terminal (again, not setting up ACH/recurring payments, but processing the card in real-time on a card terminal such as with a Stripe card reader)


One: Don't ever do this.


Two: Here is why:


Manually entering a card number in this type of situation you are putting yourself in a 99.999999% chance situation of losing a dispute brought against that transaction. You can't prove that the customer gave you the authorization to use their card in this manner. Oh, and them writing a note or sending an email saying you do have authorization actually does not help you much since our cards have chips now to avoid these situations. So, you are accepting all liability in this situation and especially if you write the information down and leave it unsecured. (You shouldn't do this anyway, but if you do - stop and shred what you have) It's kind of like a punishment for doing this since we have secure chip cards nowadays.



So if you were curious why we were required to have chips in our cards, now ya know. It's for everyone's protection. Yours obviously and it cuts down on the fraud banks have to investigate. And, per usual, the US is actually behind on ball on this. The EU and other countries have had chips for yearrrrrs.



I hope this clears up the bit of curiosity you may have had reminds you not to manually input card numbers. We will wrap up "banking week" with two last posts, one explaining overdrafts/NSF (non-sufficient funds) and payment processing fees. We have touched on payment processing fees before, but this post will be a lot more in-depth, provide various resources directly from Visa/MasterCard who mandate card processing rules, best practices and examples.


See you tomorrow!


x,

Your Compliance Bestie







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