Franchising Today - Fall 2016 - 8

Column by John Gotaskie Jr.

Merchants who do not accept chip cards
have seen the liability for chargebacks
for fraud shifted to them.

CHIP CARD DEBATE
the adoption of chip cards at franchises instead of swiping credit cards can
reduce fraud, but it might result in more chargebacks and many more disputes.

THETheCREDIT
CARD
IN
credit card industry
in the INDUSTRY
When you swipe, the card
terminal
United States haltingly moved toward
greater issuance and acceptance of
chip-enabled credit cards - sometimes called EMV (for Europay, MasterCard and Visa) cards - last year.
A chip-enabled card - or simply, just
a chip card - works differently from
a card with a magnetic strip. A card
with a magnetic strip simply has the
card information, such as the number,
embedded in it.
8

franchising-today.com

FALL 2016

essentially just confirms with the issuer that the card number is linked to
a valid account. The card information
being transmitted, such as the card
number, can be stolen at any time
during the payment process - or later,
if, for example, it is stored on a retailer's computer system that is hacked.
A chip-enabled card has all of the
same card and account information
embedded on it. On a chip card, how-

ever, two additional things happen
upon use. First, the chip contains
a cryptographic key that authenticates the card as a genuine, valid card.
Second, a unique, one-time code is
generated for each and every transaction. Without both the key and the
one-time, unique code, the attempted transaction is invalid and rejected. Consequently, while a fraudulent
transaction made using a swipe card
is often uncovered only after the sale,


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Table of Contents for the Digital Edition of Franchising Today - Fall 2016

Contents
Franchising Today - Fall 2016 - Cover1
Franchising Today - Fall 2016 - Cover2
Franchising Today - Fall 2016 - 1
Franchising Today - Fall 2016 - Contents
Franchising Today - Fall 2016 - 3
Franchising Today - Fall 2016 - 4
Franchising Today - Fall 2016 - 5
Franchising Today - Fall 2016 - 6
Franchising Today - Fall 2016 - 7
Franchising Today - Fall 2016 - 8
Franchising Today - Fall 2016 - 9
Franchising Today - Fall 2016 - 10
Franchising Today - Fall 2016 - 11
Franchising Today - Fall 2016 - 12
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Franchising Today - Fall 2016 - 14
Franchising Today - Fall 2016 - 15
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Franchising Today - Fall 2016 - 17
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Franchising Today - Fall 2016 - 33
Franchising Today - Fall 2016 - 34
Franchising Today - Fall 2016 - 35
Franchising Today - Fall 2016 - 36
Franchising Today - Fall 2016 - 37
Franchising Today - Fall 2016 - 38
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Franchising Today - Fall 2016 - 49
Franchising Today - Fall 2016 - 50
Franchising Today - Fall 2016 - 51
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Franchising Today - Fall 2016 - 53
Franchising Today - Fall 2016 - 54
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Franchising Today - Fall 2016 - Cover3
Franchising Today - Fall 2016 - Cover4
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