Chances are that at some point over the past year or so, you’ve seen the term “EMV” mentioned in the press and/or heard it mentioned in conversation. However, you may still be wondering exactly what EMV is, what you really need to know about it, and why it’s important. Let’s take a look at the answers to some of the most common EMV-related questions:
- What is EMV? Developed by and named for Europay, MasterCard, and Visa, EMV is a smart chip technology that’s becoming the global standard for the processing of credit and debit card payments. Under the EMV umbrella, payment instruments—like credit and debit cards as well as mobile phones—feature embedded microprocessor chips that store and protect cardholder data.
The EMV standard has many names worldwide and, as such, is also referred to as “chip-and-PIN” and “chip-and-signature.” EMV-enabled cards are also referred to as “chip cards.” In most countries that have moved to EMV technology, users are typically required to enter PINs to complete payments instead of signing their names. POS terminals and chip-and-PIN systems are considered more secure than chip-and-signature systems. However, in the U.S., both Visa and MasterCard allow retailers and banks to decide if they want to implement EMV in chip-and-PIN or chip-and-signature mode.
- Must retailers adopt POS technology that accommodates EMV technology? Retailers and other merchants are not required to replace their existing technology with POS hardware whose configuration will allow them to handle chip card transactions. However, it is strongly recommended that they do so given upcoming EMV deadlines set by Visa, MasterCard, and American Express. As of October 2015, Visa will render merchants exempt from 100 percent of data compromise penalties only if 95 percent of Visa transactions originating in their stores originate from EMV-compliant POS terminals. MasterCard will do the same and American Express will, also beginning in October 2015, transfer liability for certain types of fraudulent transactions away from parties (i.e., merchant, processor, or sub-processor) with the most secure form of EMV technology in place.
- What are the benefits of EMV? EMV will cause a reduction in credit card fraud resulting from counterfeit, and the number of lost and stolen cards will decrease as well. This is because EMV cards store payment information in a secure chip rather than on a magnetic stripe, and the personalization of EMV cards is done using issuer-specific keys. Counterfeit magnetic stripe cards are easy to make, but it is virtually impossible to create a counterfeit EMV card that can be used to successfully conduct an EMV transaction.
Moreover, EMV technology supports enhanced cardholder verification methods, which in turn has the potential to improve control of “offline” credit card transaction approvals. EMV also provides interoperability with the global payments infrastructure: EMV chip card holders can use their card on any EMV-compatible payment terminal, meaning that U.S. retailers with EMV-ready POS technology can easily accept credit card payments by visitors from abroad.
- Are EMV-ready POS systems and tablets currently available in the marketplace? Yes. Vendors have already introduced EMV and smart card readers, as well as technology that can be easily adapted to accept chip cards. If you’re in the market for a new POS system, it makes sense to opt for an EMV or smart card reader. If you already have a reliable POS solution in place, your best bet is to discuss the update process with your POS solution provider well in advance of the October 2015 deadline.
There’s no stopping it: EMV is coming. According to the EMV Migration Forum, some 17 to 20 million chip cards had been issued to U.S. consumers by the end of 2013. This number is expected to jump by 100 million or more cards by the end of 2014. Millions of EMV-capable terminals have been installed, some of which are accepting chip cards today. Retailers that familiarize themselves with the technology now, and prepare for the change in advance, stand the best chance of “surviving” the transition with minimal hassle.
