The Role of EMV Technology in Reducing Fraud in Veterinary Payment Processing

In general, payments in the healthcare industry are highly susceptible to fraud. According to National Health Care Anti-Fraud Association (NHCAA) estimates, the US healthcare system loses $68 billion annually to fraud. Some conservative estimates suggest fraud amounts to 3% to 10% of the total expenditure in the healthcare industry, bringing the total to close to $300 billion every year!

As part of this vast healthcare sector, veterinary payment processing faces the same fate. However, to ensure data security and protect your customers’ trust, the adoption of EMV technology has become a beacon in the dark with its dynamic data authentication.

But is it a foolproof technology to reduce payment fraud? If so, why are there billions of dollars at stake? In this article, we will know just that and more. We will also review the significance of EMV technology in veterinary payment processing and if and how you should adopt it with your current setup.

What Are the Challenges in Veterinary Payment Processing?

As with any healthcare establishment, veterinary practices cater to enormous volumes of transactions. This includes, but is not limited to, consultancy payments, medications, and supplies. With a wide clientele, most favor card-not-present (CNP) transactions (like over-the-phone payments for prescription or other services), and the risk of fraud becomes much higher than usual. This is because, during these CNP transactions, the lack of verification mechanisms makes it much easier for fraudsters to exploit vulnerabilities.

Implementing EMV-compliant systems can mitigate these risks by ensuring the security of in-person transactions and providing a foundation for integrating additional security measures for remote payments.

A Brief Overview of EMV Technology

EMV, or Europay, MasterCard, and Visa, is a worldwide standard technology for debit and credit card transactions. This system uses integrated circuit cards, which are commonly referred to as “chip cards.” The little embedded microprocessor chip in these cards stores all the data and secures the card using dynamic data authentication. During this authentication process, it generates a unique code every time a transaction is processed – making it practically impossible for threat actors to duplicate the card information.

Compared to MSR (magnetic stripe card), which is much easier to duplicate or alter, EMV technology offers better and more advanced security features for fraud prevention. Additionally, EMV cards can be used for CNP, card-present (CP), and contactless transactions.

Overall, the matter is an option for veterinary businesses, focusing on improving security and reducing fraud.

The Evolution of Payment Fraud

Before the introduction of EMV chips, MSR or magnetic stripe cards were widely adopted, introduced in 1970 first by American Express, MSR cards were hit then, revolutionizing the entire payment industry. 

However, as the technology evolved, threat actors began to understand the static nature of the data stored on the stripe, including the cardholder’s name, card number, and expiration date. After the revelation, MSR quickly became a host to various forms of fraud, including skimming and cloning.

Fraudsters could easily copy card information and create counterfeit cards, leading to substantial financial losses for businesses and consumers.

The introduction of EMV technology marked a significant advancement in combating such fraudulent activities. It introduces dynamic data for each transaction. As mentioned, unlike magnetic stripes, these chips generate a unique transaction code for each operation, which cannot be reused.

As EMV technology has become more widespread, it has greatly reduced instances of card-present fraud. Financial institutions and businesses globally have adopted EMV standards, dramatically decreasing losses due to fraud. This technology protects against existing threats and adapts to new security challenges, marking a major step forward in the ongoing battle against payment fraud.

Impact of EMV on Fraud Reduction

Implementing EMV technology has led to a notable decline in card-present fraud. For instance, in the United States, there was a 76% reduction in card-present fraud between 2015 and 2018 following the adoption of EMV. This decline underscores the effectiveness of EMV in enhancing transaction security across various industries, including veterinary services.

Benefits of EMV Adoption in Veterinary Practices

Adopting EMV technology in veterinary practices offers several advantages that enhance security, operational efficiency, and client satisfaction.

• Enhanced Security

EMV cards utilize embedded microprocessor chips to store and process payment data, replacing the traditional magnetic stripe. This technology significantly reduces the risk of counterfeit fraud, as the dynamic authentication process makes it challenging for unauthorized parties to replicate card information.

• Liability Shift

The payment industry has implemented a liability shift concerning transactions. Businesses not upgraded to EMV-compliant terminals may be held financially responsible for certain types of fraud. By adopting EMV technology, veterinary practices can protect themselves from these liabilities, ensuring current payment standards.

• Client Trust

Clients are increasingly aware of veterinary payment security issues. Implementing EMV technology demonstrates a commitment to safeguarding their financial information, fostering trust, and encouraging repeat visits. A practice that prioritizes security is likely to enhance its reputation and client loyalty.

• Reduced Chargebacks

EMV technology’s enhanced security features lead to a decrease in fraudulent transactions, reducing the number of chargebacks—a common issue in veterinary practices. This reduction can result in cost savings and streamlined financial operations.

• Future-Proofing the Practice

The payment landscape continually evolves, with a growing emphasis on security and technology integration. Adopting EMV technology positions veterinary practices to accommodate future advancements in payment systems, such as contactless payments and mobile wallets, ensuring long-term operational relevance.

Implementing EMV in Veterinary Practices

Implementing EMV technology in veterinary practices is a multifaceted process that enhances payment security and operational efficiency. The key steps involved include:

1. Upgrading POS Terminals

First, evaluate your existing point-of-sale (POS) systems to determine if they support their actions. Older terminals may require upgrades or replacement to handle chip-enabled cards effectively. Ensure new EMV-capable terminals integrate seamlessly with your Practice Information Management System (PIMS) to streamline payment processing and reduce manual entry errors.

2. Staff Training

Provide comprehensive training for staff on using EMUsings, including processing chip-and-PIN and chip-and-signature transactions, to facilitate smooth client payment experiences. Don’t forget that employees should remember the importance of EMV technology in preventing fraud and properly handling card-present and card-not-present transactions to maintain data security.

3. Compliance with PCI DSS

Recognize that the Payment Card Industry Data Security Standard (PCI DSS) comprises security requirements designed to protect cardholder data. Adopt necessary security protocols, such as data encryption and regular network monitoring, to comply with PCI DSS and safeguard sensitive payment information.

4. Client Communication

Notify clients about the transition to EMV technology, emphasizing the enhanced security measures implemented to protect their payment information. Provide clear instructions and signage at the point of sale to assist clients in using chip-enabled payment methods, ensuring a seamless transaction process.

5. Continuous Monitoring and Maintenance

Keep POS systems and related software up to date to address emerging security threats and maintain compliance with industry standards. Conduct periodic training sessions to keep staff informed about the latest security practices and any updates to payment processing procedures.

Addressing Card-Not-Present Transactions

While EMV technology significantly reduces card-present fraud, veterinary practices must also address the security of CNP transactions, which are common in scenarios like telemedicine consultations or phone orders for pet supplies.

1. Tokenization

Tokenization replaces sensitive payment information with a unique identifier or ‘token,’ which is meaningless if intercepted. This process ensures that actual card details are neither stored nor transmitted during transactions, reducing the risk of data breaches. By minimizing the storage of sensitive data, tokenization aids in adhering to PCI DSS, thereby simplifying compliance efforts.

2. Secure Payment Gateways

Utilizing secure payment gateways that comply with EMV standards ensures that all transaction data is encrypted during transmission, protecting it from potential interception or fraud. Many advanced payment gateways offer integrated fraud detection and prevention tools, such as Address Verification Service (AVS) and Card Verification Value (CVV) checks, which help verify the legitimacy of transactions.

3. AVS

AVS checks if the billing address given by the client matches the address registered with the credit card issuer. If there’s a discrepancy, it could suggest possible fraud, prompting the practice to verify further before completing the transaction.

4. CVV Checks

Requiring clients to provide the CVV—a three or four-digit number on the card—adds an extra layer of verification, confirming that the client possesses the physical card during the transaction.

5. Strong Customer Authentication (SCA)

Implementing SCA requires clients to provide two or more verification elements—such as a password, a mobile device confirmation, or biometric data—before completing a transaction, reducing the likelihood of unauthorized access.

6. Regular Security Audits and Staff Training

Conduct regular audits of your payment processing systems to identify and address vulnerabilities. Ensure staff are trained to recognize and handle suspicious activities related to CNP transactions.

Global Adoption and Statistics

The global adoption of EMV technology has grown significantly, showcasing a worldwide effort to enhance payment security and reduce fraud. By the end of 2023, nearly 14 billion EMV chip cards were in circulation globally, representing a notable rise in the issuance of EMV-enabled cards.

Approximately 70% of all issued payment cards worldwide are now EMV-enabled, highlighting a strong shift toward this secure transactions technology. Additionally, 94.76% of card-present transactions globally are conducted using EMV chip technology, reflecting its widespread acceptance at points of sale.

Regional adoption rates further illustrate this trend. In Europe Zone 1, which includes Western and Northern Europe, 97.3% of point-of-sale transactions are EMV-compliant. Canada, Latin America, and the Caribbean report an adoption rate of 93.8%, while Africa and the Middle East follow closely at 93%.

Conclusion

EMV technology is crucial in reducing payment fraud in veterinary practices by offering enhanced security and dynamic data authentication. As fraudsters continue exploiting vulnerabilities in older payment systems, adopting EMV technology ensures that veterinary practices can protect their clients and businesses from financial losses.

While EMV significantly mitigates the risk of card-present fraud, it also provides a foundation for improving security in card-not-present transactions through tokenization and secure payment gateways. As the global shift towards EMV adoption continues, veterinary practices that implement these systems comply with industry standards, build trust with their clients, reduce chargebacks, and future-proof their operations against evolving security threats.

Frequently Asked Questions