What is the main purpose of magnetic swipe cards?

What is the main purpose for magnetic swipe cards

What is the main purpose of magnetic swipe cards? When we talk about PVC Cards, we are talking about one technology, we discuss more in this post.

While EMV chip cards are nothing new in other parts of the world, the U.S. has only recently adopted this technology.

Since October 2015, the U.S. started undergoing a significant payment technology evolution upgrading from magnetic stripe (magstripe) cards to EMV (named for the original developers, Europay, MasterCard, Visa). This transition is also known as the EMV Liability Shift.

However, unlike other countries around the world that have transitioned to this form of payment technology, the US did not enact a “card chip law” to make upgrading mandatory.

As a result of this act and non-law, many U.S. merchants have foregone updating their payment technology to accept chip cards leaving them more susceptible to credit card fraud.

Let’s take a look at the difference between a chip card vs. magnetic stripe card and discuss how modern technologies are protecting both merchants and consumers.

What is EMV Liability?

As the name of the act implies, the EMV Liability Shift only shifts the liability from one party to another.

Unlike other countries around the world that transitioned this form of payment technology, the US did not enact a “card chip law” to make upgrading mandatory.

As a result of this act and non-law, many U.S. merchants have foregone updating their payment technology to accept chip cards leaving them more susceptible to credit card fraud.

Merchants with EMV-compliant technology may be able to dispute the claim that the cardholder was the person who made the purchase.

However, merchants without a credit card must make their transactions in cash.

Also, merchants will face chargeback fees and may also have to pay EMV non-compliance fees when they process a fraudulent chip card transaction.

For the first time, merchants are responsible for covering fraudulent charges not the issuer.

So for small business owners, too much fraud could spell financial ruin your business.

What are the Differences in Chip Card vs Magnetic Stripe Card Transactions?

For consumers, the most noticeable difference when it comes to chip cards versus magnetic stripe cards is how they use them during transactions. With magstripe cards, you swipe. With EMV chip cards, you dip.

A magnetic stripe card transaction

A magstripe transaction begins with a quick swipe of the card through a card reader.

The payment terminal then sends an authorization request to the parties in the payment chain (typically the acquirer, payment processor, and issuing bank).

If approved, the terminal may request a PIN or customer signature to verify and complete the transaction.

transaction in EMV

An EMV transaction starts when the user inserts, or dips, the card into a chip card payment terminal, where it remains throughout the entire transaction.

The payment terminal then sends an authorization request to the parties in the payment chain same as a magstripe transaction.

The card will authenticate data and request the terminal to authorize the transaction. The terminal requests authorization and receives a response and that’s the point when the customer can remove the chip card from the EMV chip card reader.

One thing customers seemingly took notice of was the amount of time it took to process a chip card transaction.

For an impatient nation that was accustomed to pulling their credit card from their wallet, making a quick swipe and immediately putting it back in their pocket, the few extra seconds it took to leave the card in the payment terminal felt like an eternity.

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