EMV Payment vs. Magstripe Payment: 3 Pros for EMV Payments

Nicole Georgiev
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    Newer credit and debit cards these days feature a chip. This is a kind of contactless payment option referred to as EMV payment. These chip cards offer better credit card fraud prevention compared to a magstripe payment. 

    Europay, MasterCard, and Visa (EMV) cards require you to insert the chip into the card reader. Magstripe cards, on the other hand, require customers to simply swipe the card through the card reader. When it comes to EMV vs Magstripe, the differences are more than just how customers use the card. 

    This blog explores EMV payment and Magstripe payment options and their differences. Keep reading to understand what the pros and cons of each of the restaurant payment options are and how they can help your eCommerce accounting processes.

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    EMV Payment vs Magstripe Payment History

    EMV payment is a relatively new kind of restaurant payment technology in the United States compared to other countries in the world. US credit and debit cards were upgraded in late 2015 from magstripe to EMV cards. This was done to increase the security of these payment methods. 

    With new cards comes the need to upgrade payment technology in order to accept the EMV payment. This includes the POS system, POS software, and POS system features

    However, due to a lack of laws that enforce a mandatory EMV payment card upgrade, merchants have not prioritized updating their POS equipment. This has left many businesses and customers more susceptible to credit card fraud. 

    Key Takeaway: EMV payment methods are more secure compared to magstripe payment methods. In order to decrease the risk of fraud for your business and your customers, it’s important to invest in EMV card reader POS technology. 

    What is EMV Payment?

    EMV payment refers to credit or debit cards with a chip on them. The chip transmits financial information to the appropriate financial institution once the credit or debit card is inserted into the card reader. EMV payments are one of the most preferred restaurant payment options for customers

    When comparing EMV vs. Magstripe payment, EMV is known to be much more secure. Once a customer completes an EMV payment, the chip stores a digital code that is unique to that purchase. Each purchase contains a different digital code which makes it hard for fraudsters to steal data.

    It’s possible to have an EMV chip on different payment types aside from credit and debit cards. These include public transit cards and government IDs. 

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    ​​Pros of EMV Payments

    One of the biggest advantages of using an EMV payment is the additional security you get compared to a magstripe payment. This is similar to when you use integrated payments instead of non-integrated payment systems. 

    Three pros of EMV payments include: 

    1. Decrease in chargebacks. An increase in transaction security means that you’ll have to deal with fewer chargebacks and less fraud overall. Chargebacks refer to the return of money to the payer. If you choose not to implement EMV-compatible restaurant POS systems, your restaurant business will risk having chargebacks. This will get costly over time.
    2. Easy upgrades. Upgrading to an EMV payment system at your restaurant is simple and cost-effective. However, this depends on the setup features that are involved. In some cases, existing hardware will suffice whereas, for others, you will need to acquire additional hardware to ensure an EMV-certified integration. 
    3. Customer protection. Building trust with your customers is important when opening a business and opening a restaurant. One way to do this is by offering secure payment methods, like EMV payment. This payment method will result in an increase in savings and fewer chargebacks. When it comes to protecting customers, chip payments generate a unique code each time the card is used. This leads to fewer customer disputes and better customer satisfaction.

    Cons of EMV Payments

    Using an EMV payment method at a brick and mortar restaurant or through an online ordering platform helps keep your card safe. However, there are some payment methods that are less secure.

    The less secure EMV payments include inserting and signing your card without entering a PIN or tapping the card. This is similar to using any kind of outdated restaurant technology.

    What is Magstripe Payment?

    Magstripe payment, or magnetic stripe cards, refers to cards with a magnetic label that transmits financial information to card issuers. The process of transmitting information occurs once a customer swipes their card through a magnetic stripe card reader when authorizing a purchase. 

    Magnetic stripes are present on many cards. These include payment cards, loyalty program cards, and identification cards.

    In terms of payment cards, the magnetic stripe is where cardholder information is embedded. This information includes the cardholder’s name, account number, account balance, and address. 

    It’s common for magnetic payment technology to also hold onto security functions. As a result, card issuers can approve or deny transactions at a POS system, including an mPOS or food truck POS.

    Pros of Magstripe Payments

    Magstripe payment is the traditional method of paying with plastic payment cards, such as debit or credit cards. The stripe stores up to 60 characters magnetically. 

    Pros for using magstripe payments include: 

    • Cards are cheap to produce
    • Simple for customers to use
    • Security is increased thanks to the use of personal identification numbers (PIN) that is specific to the cardholder
    • Card data can be altered if necessary

    Cons of Magstripe Payments

    There’s a reason that the magstripe payment method has fizzled out over the years. This is especially true with the implementation of EMV payment methods. 

    Cons for using magstripe payments include:

    • Not as secure compared to EMV payment methods as thieves can duplicate the magnetic strip and its data
    • Strong magnetic fields can destroy the magnetic strip data 
    • Limited data storage capacity

    Why EMV Payment Is Preferred

    If you’re thinking of opening a food truck, opening a bakery, or opening a grocery store, you will have to consider implementing different customer payment methods. As a business owner or restaurant manager, your customers should be your top priority and with that comes their security.

    With EMV payment methods, you will reduce the risk of fraud in your establishment. There is less of a risk of fraud for your business and your customers. This is due to the fact that the magnetized stripe on magstripe cards is easy to duplicate on fraudulent cards. On the other hand, EMV payment cards with chips contain information that can’t be duplicated as easily.

    EMV payment methods also have cheaper payment processing fees and transaction fees. Offering customers a choice of payment methods will lead to better customer service. Common options include inserting their chip, tapping their card, or mobile payment options.

    Allowing customers to use EMV payment methods also allows you to turn tables faster. This is because it opens up the possibility of paying at the table. Pay at table restaurants will bring POS devices to their customers to quickly and easily pay using EMV technology.

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    Frequently Asked Questions About EMV vs Magstripe Payments

    Your customers and your restaurant deserve convenience, choice, and security when paying. That’s why investing in the proper payment services provider is ideal. This includes EMV payment methods. Here are commonly asked questions about EMV payment vs magstripe payment:

    What Is the Difference Between a Chip Card and Magnetic Card?

    The main difference is that magnetic cards are swiped whereas chip cards are inserted into a card reader. Chip cards are more secure compared to magstripe cards. However, not all merchants and restaurants have chip card readers. 

    Why Is Chip Better Than Swipe?

    Chip cards are better than swipe cards because of the additional security that helps prevent fraud thanks to EMV technology. Magnetic strip cards are easier to duplicate onto another card whereas chip cards are harder to steal information from.

    How Do I Know if My Debit Card Is EMV?

    You can determine if you have an EMV debit or credit card by examining it for an EMV chip. The chip is located on the face of the card on the left side. This is the side that you insert into the card reader when it’s time to authorize a payment.

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