EMV stands for Europay, Mastercard and Visa, these companies came together to create a standard. EMV is a payment method which is based on a technical standard for a smart payment card, for payment terminal(s) and automated teller machine which accept them. EMV Credit Card is a smart card, it is also called Chip Credit Cards.
In addition, some users called it integrated circuit cards or IC cards which store their data on integrated circuit chips. These include cards that must be physically inserted or dipped into a reader, as well as contactless cards that can be read over a short distance using near-field communication technology
Payment cards that comply with the EMV standard are often called Chip and PIN or Chip and Signature cards, depending on the authentication methods employed by the card issuer, such as a personal identification number (PIN) or digital signature, source.
What does EMV Stand for?
EMV is short for Europay, MasterCard, and Visa as mentioned above. This was founded in 1994 by these three companies. It commonly refers to a credit card with a smart chip or simply chip credit card (EMV Credit Card). The EMV standard is a security technology used worldwide for all payments done with credit, debit, and prepaid EMV smart cards.
The new chip on credit cards means payment security for 10 billion cards in early 2020. This is super amazing; it can be used in three forms: contact, contactless, and mobile. Now let dig deep on the EMV credit card.
What Is EMV Technology?
EMV is a security standard for storing account information on credit cards. It is an alternative to the magnetic stripe (magstripe) that has traditionally been used to store information on the backs of cards in the United States.
It is a more secure way to store information, providing better protection against some forms of credit card fraud than the older magstripe, because it cannot be as easily skimmed by fake credit card readers.
Types of EMV Credit Card
There are two main types of EMV credit card technology, these have been used before and are still in use today
Chip-and-Signature
Chip-and-PIN
Chip-and-Signature: The chip-and-signature function requires a signature to verify transactions, just like credit cards traditionally have in the past.
Chip-and-PIN: On the other hand, the PIN function requires a four-digit PIN, just like a debit card. The most secure form of credit card processing. Chip and PIN require that consumers enter their own personal identification number to authorize any transaction.
The benefits of Chip and PIN are obvious, as evidenced by the improvement of fraudulent losses in the U.K. from 2004 to 2008, where the money lost to fraud dropped initially $356 million to shockingly less than $100 million.
Today, every chip credit card you get in the U.S. will use Chip-and-Signature technology, in addition to having a magnetic stripe on the back.
Some cards also include the Chip-and-PIN function, so they are more compatible overseas and more secure in the U.S. There is much more to EMV technology. But in most cases, especially if you will just be using your card in the U.S. You do not need to worry about anything other than how to make purchases with your EMV card.
EMV Chip Card Features
The payment card with a chip has three key features, these features are amazing which we cannot underestimate.
====> Option to securely store confidential information
====> Opportunity to perform cryptographic processing
====> Possibility to complete processing
Like any other card, the main goal of the microchip cards is to make a payment. As we have mentioned before, the EMV credit card can perform two types of payments, contact and contactless.
It may support both or only one of them. In order to make a payment, the chip connects to the chip-enabled reader. Then two processes take place.
====> During contactless payment, it is possible to wave the card no further than 4 cm from the reader before it performs its function.
====> In the case of contact payment, the chip card has to make contact with an EMV chip card reader before the transaction takes place.
To make a payment at the point of sale (POS), the customer needs to make sure the reader supports the chip cards.
What does EMV Chip Credit Card mean for You and Your Business?
The EMV deadline, commonly referred to as the liability shift, was set for October 1, 2015. The liability shift means that card issuers must begin to implement EMV chips in the cards they produce.
Meanwhile, merchants who accept credit cards in a face-to-face environment must upgrade to chip-compatible equipment to avoid potential losses due to fraud and chargebacks.
EMV Credit Card Processing and You
EMV credit card processing has become the global standard for transactions in recent years, but the trend only recently began in the U.S.
Retailers in the U.S. have been reluctant when it comes to investing in newer credit card readers, not to mention the potential liability issues and compliance rules that come with EMV credit card processing.
As the threat of credit card fraud grows in the public’s mind, the security features offered by EMV credit card processing are growing increasingly important.
According to Aite Group, in 2016, 70% of credit cards and 40% of debit cards will ultimately become chip-enabled. If these estimates prove to be true, retailers in the U.S. will face the potential of tremendous loss at the cost of refusing to make the transition.
For businesses to thrive in the next few years, EMV credit card processing should become a top priority for the expansion of payment options. Let One Payment be your guide in implementing this processing solution for your business.
EMV Chip Card Processing
Let take a closer look at the chip processing system. We are going to talk about two types separately, to define their differences. Therefore, we need to mention that during the EMV transaction, the chip is responsible for data processing.
Also, the chip is a source of the unity of rules that influence the outcome of the transaction. The terminal, in this case, is the supporting part of the procedure. It helps to enforce the set of rules. The rules include but are not limited to:
====> Authentification of the offline information
====> Verification of the card owner’s identity (via signature or PIN)
====> Online authentification
The chip rules define their final combination, and the issuing bank will use them to approve the transaction.
EMV Credit Card Contact Transaction
The chip credit card contact transaction takes the following steps to complete its process.
Step 1 ====> Pick the Application: The EMV chip can have one or more applications. Then the terminal and the chip pick the application they both support and agree to use it.
Step 2 ====> Application Processing and Reading: The terminal reads the application it has chosen with the chip.
Step 3 ====> Authentification of the Offline Information: The authentication takes place with SD Association, Dynamic Data Authentication, or Application Cryptogram Generation help.
Step 4 ====> Restrictions’ Check: The checks take place to confirm that the chip can perform the processing of the transaction within the time limit.
Step 5 ====> Card Owner Verification: The card owner verification takes place with the terminal-supported and chip-agreed method. It may be a signature or PIN.
Step 6 ====> Risk Management: The terminal checks if there are sufficient requirements for online processing.
Step 7 ====> Terminal Check: Based on the previous steps, the terminal chooses the action, make the decline offline, accept offline, or proceed online.
Step 8 ====> The Chip’s Response: Based on the rules the chip has, it answers the terminal with three outcome options, which are offline decline, approval and or proceeding online.
Step 9 ====> The Transaction’s Finalizing: If there is enough data to complete the transaction, it is confirmed with an approved or declined message.
Step 10 ====> Online Processing: The chip may request the processing to go online. Then the terminal builds the online connection. The request comes back with the issuer authentication and the terminal sends it to the chip to make the approval.
What are the consequences of not being prepared for the Liability Shift?
If a cardholder using a chip card initiates a chargeback and the merchant was not utilizing chip-compatible equipment, the merchant will be liable for any counterfeit card transactions.
In addition, the merchant who does not have an EMV-ready terminal could potentially become the target of criminals looking for opportunities to steal credit card information from the less secure non-chip-compatible point of sale equipment.
How to Use Your New EMV Chip Credit Card?
When you are making a purchase, the main difference between magstripe cards and EMV chip cards is the length of time the machine needs to read your card information.
In this case, the newer technology is not faster. Rather than swiping your card or dipping it quickly into the reader and pulling it out. You insert your credit card in the reader and leave it there for several seconds.
This change was disconcerting at first for Colin Weir, a network engineer in Philadelphia who received his first EMV chip card back in January.
My first time using the EMV credit card, my instinct was to dip it like an ATM card, not insert it and leave it, weir says. That made the system all cranky and it took a good 15 seconds to recover.
There are a few other differences as well. For one thing, some restaurants will allow you to pay for your meal at the table with a portable EMV chip card reader. That way, the server will not disappear with your card to swipe it at the register. These systems also allow you to add a tip, often calculating it for you.
This change cannot come soon enough for Weir. Several of his chip-enabled cards still have magnetic stripes on them. A waiter could still walk away and skim my card, Weir says.
Do I Have to Sign or Enter a PIN When I Make an EMV Chip Transaction?
It depends on your specific card. Most cards just have Chip-and-Signature, while some others also feature Chip-and-PIN.
If your card only has Chip-and-Signature, you will be prompted to sign either the terminal screen or a printed receipt.
If your card has both signature and PIN, the checkout system will default to your preferred method, which is almost always signature. You will not be able to choose signature or PIN, the terminal will automatically use your preferred method
What is an EMV chip?
EMV chip cards use a smart chip instead of a mag stripe to store data that is needed to process a transaction. EMV defines a suite of security standards for credit and debit card transactions. EMV can be used for NFC mobile payments as well.
Chip & PIN and Chip & Signature, what is the difference?
Most cards issued in the United States are chip and signature. The EMV payment process requires the cardholder to provide a signature to complete a transaction, just like credit cards traditionally have in the past. While outside the United States, chip & PIN is more common.
The PIN function requires a secret four-digit PIN code known only by the cardholder to validate the EMV payment. It is more secure
In 2020, most of the ATMs and payment terminals outside the United States have been updated and can detect that your card is EMV compliant.
That is, a PIN was not issued on your card and validate the transaction. Anyway, it is a good idea to travel with a chip card that offers both authentication methods and carry more than one credit card
Why is EMV More Secure?
EMV is more secured because it increases security and global interoperability to card and mobile payments, even in card-not-present payments. If coupled with a card reader or a one-time password device.
The chip on an EMV card is capable of much more sophisticated authentication than magnetic-stripe cards. In other words, there is a fully operating computer system embedded in every EMV card.
The chip is tamper-proof, making the card nearly impossible to clone. With the former technology (the magstripe), invented in the ’60s by IBM, a payment card became very easy to duplicate.
What are EMV Benefits?
We believe some benefits are attached to the use of EMV credit card. This part of the article will list out some of the key benefit of EMV chip credit card.
Payment security: EMV chip cut fraud by half in the United State of America the first year. EMV is one of the most secure forms of payment you can trust the more. EMV is almost 100% effective in preventing face-to-face (in-store, aka card-present fraud) counterfeit card fraud.
When France migrated to EMV in 2005, card fraud nearly disappeared. The case was replicated in the United Kingdom in 2012 (chip and PIN).
The U. S began adoption in late 2015, and a study from the (U.S.) Federal Reserve issued in 2018 showed that the amount of card-present fraud in the country declined from $3.68 billion in 2015 to $1.91 billion in 2016.
It is a 48% decrease in ONE year. Over three years and a half, it’s a decrease of 87%, according to the June 2019 Visa report mentioned earlier.
Strengthened Customer Relationships: Migrating to EMV is an opportunity to show your customers that you take their security seriously
Global Interoperability of the EMV Standard: EMV is the worldwide standard for payments. The market penetration of the technology is growing worldwide, particularly the nearly 100% EMV compliance in portions of Europe and Canada.
Today, with magnetic-stripe cards, your customers may not be able to pay with their cards when they are traveling internationally. In other words, wherever EMV chip cardholders make purchases, they get reliability and convenience.
Increased Card Spending: The tap-and-go convenience of a contactless EMV chip card is likely to make it your customers’ new favorite, leading to increased loyalty and spending on that card. Adding contactless capacity has even generated a significant increase in contact transactions made with those cards.
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What are EMV Chip Card Drawbacks?
Despite the numerous benefits, the standard has some drawback. Mostly, those disadvantages are connected with concurrent expenses. So, the list of main drawbacks can look as follows:
Employees Education: As POS terminals that accept chip cards differ from the magnetic card readers, you need to train the workers.
Speed: Although chip transactions are fast as well, they still need a few seconds more to complete one. That might frustrate the customers.
Costs: The terminal price doesn’t vary that much. Nevertheless, the updating may be rather pricey.