Credit Card Processing Blog

The Complete EMV Overview and The Ultimate Business Opportunity

July 5, 2016 11:00 AM / by Reliance Star

The U.S. is in the process of migrating to EMV, providing consumers and businesses with a safer, more secure means of payment. What exactly is EMV, how is it safer than using debit and credit cards with a magnetic stripe, and why is securing EMV payment facilities the ultimate business opportunity?

EMV stands for Europay, MasterCard, and Visa. A global standard for debit and visa cards with computer chips and the technology to process them, EMV reduces fraud and counterfeit card rates and the costs associated with these crimes. Already the norm in many other countries, experts predict that it will be at least 2017 before 90% of U.S retailers are completely ready to accept EMV chip card payments.

How are EMV cards different than traditional debit or credit cards?

Traditional credit and debit cards have a magnetic stripe which stores data. If that data is accessed, fraudsters can access the cardholder’s information and then use it to make purchases, to counterfeit the original card, or they can sell that information on to enable other fraudulent activities to take place.

EMV #smartpayment cards have a small, metallic square on the front, which is basically a computer chip. When an EMV card is used to make a payment, the chip in the card creates a unique transaction code. Even if a hacker did get hold of that code, there is nothing they could do with it as it cannot be used ever again. If they used it to make a duplicate card, that card could not be used; it would be denied when they tried to make a purchase.

Are EMV cards used in the same way to make a payment?

EMV cards are a little bit different to cards with a magnetic stripe because the card is inserted, or dipped, into the terminal slot. Data flows between the card chip and the customer’s financial institution; there may be a delay of just a few seconds while the unique transaction data is created and the card’s legitimacy is verified. You will then be required to sign to take responsibility for the payment (chip and signature cards), or enter a unique Personal Identification Number onto the keypad of the terminal (chip and PIN cards). It depends on the terminal the business has – it could be a couple of years yet before chip and PIN are commonplace.

When will EMV cards be the norm in the U.S?

The process is moving slightly faster with credit cards than debit cards; about one-third of all Visa cards and 67% of MasterCard-branded cards issued this year were EMV chip cards. It will take time for everyone to make the transition; some financial companies will issue chip cards when old cards expire, and some will choose to act more quickly. And where can consumers use their EMV cards? Presently, 70% of Americans have EMV chip cards – but only 40% of retailers have the upgraded terminals in place to accept them.

Does your business need EMV technology?

To encourage everyone to come on board with EMV technology, in the event of a fraud, the liability lies with whichever party is least EMV compliant. This could be either the financial institution or the merchant or business that processed the payment. Whether or not you take action to get an EMV card reader up and running could be crucial for your business.

Before too long, we could see more and more dual interface cards. EMV cards that are dual interface will support contactless card reading, or near field communication, which means the card is just tapped against the terminal scanner when a payment is made and this picks up the data from the card’s embedded chip. You could miss out on important business opportunities by not offering up-to-date payment solutions.