EMV

The Switch to EMV Payment Transactions: What It Is & What It Means for Merchants and Customers

With the exception of operators of ATM machines and fuel pump payment terminals (who have until 2017 to transition to EMV technology), merchants who accept credit and debit card transactions now bear the liability associated with a payment security breach if they aren’t equipped to process EMV transactions.

However, merchants who have updated their payment terminals in order to accommodate chip cards may still wonder just what EMV is all about. Today we’re answering your questions. Here’s a look at what EMV entails, and what it means for merchants and customers.

What Is EMV?

EMV is an abbreviation for EuroPay, MasterCard and Visa — the three organizations that were instrumental in developing the technology as a means to enhance payment security. (Despite what the name implies, other card issuers like Discover and American Express have incorporated the technology into their payment systems as well.) The term “EMV” is also used to refer to EMV-enabled cards, which have a square metallic chip on the card front that plays an important role in transaction processing.

Though many merchants in the United States were given a deadline of October 2015 to integrate EMV-enabled, point-of-sale terminals into their business operations, the technology has been used in other countries for more than a decade. Now that most payment cards in the United States are EMV-enabled, it is considered the global standard for payment processing.

Why EMV Is Considered Superior to Magnetic Strip Cards

While most of the EMV cards issued to cardholders in the United States still include a magnetic strip that can be used to swipe terminals, the United States adopted the EMV technology because of evidence that it helps keep sensitive payment data more secure than magnetic strip card transactions during processing. In fact, the United Kingdom reported that its rate of payment security fraud decreased nearly 30 percent after it implemented EMV technology.

The reason EMV cards are considered more secure than magnetic strip cards is multi-faceted. But, the most critical feature may be that EMV-enabled cards use a process called tokenization to transmit data over payment networks. Instead of using the cardholder’s 16-digit personal account number (PAN) to validate and approve/deny payment transactions (as is done with magnetic strip cards), EMV technology masks the sensitive information and replaces it with a token. Though the randomly assigned identifier is meaningful to the merchant’s payment processing systems, the card networks and financial institutions involved in a transaction, it doesn’t obviously correspond to the PAN or the cardholder’s other sensitive information to those not intended to be involved in the transaction. If there is a data breach, the information intercepted is essentially meaningless. Additionally, EMV chip cards are far more difficult for fraudsters to counterfeit than magnetic strip cards.

Assuming a merchant has implemented EMV-processing technology at the point of sale, customers with chip cards can easily take advantage of the technology. When it’s time to pay, they simply insert their chip card into the EMV terminal, leading with the chip. The card stays in the EMV terminal until the transaction is approved. The customer can then complete the transaction by signing or entering a PIN code.

For more information about EMV technology, check out the following infographic:

 

EMV Credit Card Processing

 

The transition to EMV technology in the United States may seem like a significant departure from magnetic strip point-of-sale terminals, but the process is no more complex for the customer or the merchant than swipe technology. Given the evidence that EMV technology provides greater security and reduces the impact of a data breach if one does occur, it’s a beneficial shift that merchants and customers should welcome.


 

Kristen Gramigna is Chief Marketing Officer for BluePay, a credit card processing firm. She has over 20 years of experience in the bankcard industry in direct sales, sales management and marketing. Follow her on Twitter at @BluePay_CMO.