The broad adoption of EMV has almost eradicated card-present theft in most other nations. Although the technology has existed for nearly 20 years and is widely used around the globe, chip-enabled cards have just recently become popular in the US.
The Issuer, the Retailer, the Processor, and the Acquirer must adapt how they operate to accept EMV payment. Below are some aspects that every sector member should be aware of about the implementation of EMV to assist you in better grasping the present condition of EMV and what this implies for your company heading to the future.
What exactly is EMV?
EMV is a worldwide credit card system that improves the reliability of in-person card payments. It is called after its core creators, Europay, MasterCard, and Visa. The project then added the abbreviation “Co” for EMVCo as it developed into a group of businesses.
EMV cards employ smart chips rather than magnetic stripes to store data and authenticate transactions. Users must press a PIN code entry to validate in-person transactions. This factor increases the security and dependability of EMV payments when integrated with other technological infrastructure upgrades.
How Does EMV Work?
The EMV technology is incredibly easy for customers to use. A credit card is “dipped” into an EMV scanner so that the chip may be read rather than the magnetic line being swiped. The point-of-sale (POS) device in which the card is accepted must be set up to recognize and connect with the microchip for EMV tech to function.
The microchip generates an exclusive code for each activity that is a one-time use only. The classic magnetic stripe card is substantially different from this since a low-cost card-reading equipment may imitate its data to low-cost card-reading equipment and replicate it in fake cards.
How Does EMV Mitigate Transaction Fraud?
The EMV microchip card comes with a protected microchip that can save data safely and conduct cryptographic operations while a payment is being made. When a chip card is customized, the card provider encodes security credentials into it.
These passwords, or credentials, are protected from security breaches by the EMV card’s chip and are kept discreetly. As a result, these credentials aid in preventing card stealing and card counterfeiting, two methods by which magnetic stripe cards are frequently hacked and used fraudulently.
Additionally, a transaction using an EMV chip comprises updated data, is permitted online or offline by risk guidelines set by the provider, and the card’s validity and the cardholder’s identity are confirmed.
Another approach is what is known as “EMV payment tokenization,” which involves replacing or enhancing a critical data piece, for example, a card PAN number, with a non-sensitive, encoded counterpart (a token), which is useless to strangers and lacks worth apart from a particular retailer or processing network.
As previously mentioned, every one of these payment security measures aids in preventing fraudulent activity and permits businesses to retain a simple yet extremely safe online checkout process.
How Does EMV Verify Cardholders?
EMV supports four cardholder validation strategies:
- Online PIN, in which the card provider encrypts and verifies the PIN online.
- Offline PIN, in which the EMV chip card verifies offline PIN.
- Signature authentication involves comparing the cardholder’s sign on the invoice to the signature on the card’s backside.
- No CVM is deployed when none is required, which is often the case for low-priced transactions or those at unsupervised POS stations.
To be acceptable in as many different places as possible, chip cards are customized with more than one CVMs, according to the needs of the payments system and the issuer’s preferences. Various terminal models support multiple CVMs. For instance, attended POS systems may accept online or offline PINs (or both) and signatures, although some unsupervised card-activated interfaces may accept “no CVM.”
What is the EMV Liability Shift?
The biggest card companies, such as MasterCard, Visa, American Express, and Discover, declared that any imitation fraud committed by retailers and providers who did not embrace chip encryption by October 2015 would be held accountable.
But, there was no requirement to switch to EMV chip technology. Consequently, a lot of small businesses chose to avoid making the switch and needed to be made aware of the dangers of not adopting EMV.
The card issuer previously used to be responsible for imitation theft, although there are some subtle differences. The institution that has made the smallest investment in chip technology as of October 1, 2015, whether it be the retailer or the card company, is now responsible for fraud liability.
A retailer will be held liable for fraudulent transactions if, for instance, a consumer uses a chip card, but the retailer’s machine is not authorized to accept chip cards.
Issues with the EMV Transition
One of the factors preventing some retailers from using EMV technology sooner is a need for more knowledge of the responsibility shift. Some companies are hesitant to make the initial financial commitment required for new technology and software improvements. This is possible, particularly for enterprises with many sites, such as eateries.
For entrepreneurs, even those dedicated to the transformation process, obtaining the proper credentials promptly has been a problem. The accreditation procedure must be completed by retailers and their newer EMV-compliant devices in addition to contracting an EMV software development vendor and implementing the technology. This puts businesses in a risky situation where they have new machines ready to use but are still awaiting certification, even while they are legally liable for any fraud involving clients using EMV chip cards.
Conclusion
The advantages of EMV technology are well known. The greatest benefit is the elimination of fraud. EMV-compliant machines offering limitless add-ons and enabling mobile payments with Apple Pay and Android Pay are further advantages.
It’s also critical to note that EMV technology offers pay-at-table and pay-in-aisle alternatives, allowing customers to make purchases right away without ever having to take their credit cards out of their wallets.