EMV expands potential customers through prepaid
October 17, 2014

The rise of the EMV smart chip standard is moving along. Cards are increasingly using the standard across the country, now that major banks are slowly transitioning to it. However, when it comes to deciding if and when to switch to EMV readers, a major factor that retailers should consider is the matter of prepaid. This is especially important for convenience stores and gas stations, which often have customers that may be underbanked. However, regular stores may see a particular benefit in switching to EMV. With more people switching to prepaid, they are seeking out EMV as a means of protection against fraud. Stores also may seek to develop an ability to expand their reach to international consumers.

A matter of protection and travel
One of the main issues with prepaid cards at the moment is that, despite being usable at places that accept debit card payments, they lack consistent protection against fraud. While United States federal law protects consumers if their credit or debit cards are lost or stolen, Forbes notes that there are no laws in place for prepaid specifically. Card issuers have a wide array of different liability protections for each card, but that doesn't guarantee that a person will be safe in the event his or her card goes missing. Some companies still place liability entirely on the consumer. With EMV, much of the risk in liability is greatly limited by virtue of the fact that EMV is more secure than magnetic stripe. That's why consumers are seeking out smart prepaid cards that are reloadable. Without the law to back them, consumers need some form of protection.

In addition, one of the major benefits for consumers is that EMV is an international standard, making it far easier to use cards outside the country. Conversely, international consumers looking to use their prepaid cards as a form of payment rather than carrying cash can do the same thing here. PYMNTS notes that a lot of customers have long been concerned about carrying cash around, but they also don't want to deal with using credit cards. They also don't want to deal with the risk that comes with using magnetic stripe transactions. As a result, having EMV readers will make these customers more comfortable with shopping in retail in the United States. That can bring a multitude of benefits for retailers.

Nexus: G-WEBCD6