Did you know that banks are replacing the existing magnetic strip debit and credit card with the latest EMV chip cards? As a part of security measures for transitioning money, banks are replacing magnetic cards with EMV chip cards.
What is an EMV Chip Card?
EMV is short for Europay MasterCard, and Visa; it’s the latest global standard for all types of card payments. These are the chip-based payment cards that come with enhanced safety features to prevent fraudulent practices like cloning and skimming.
When you pay with an EMV chip card, the card is dipped/inserted in the credit card chip reader. EMV cards store your data on the microprocessor chip embedded in the card, which provides added security. When you swipe the black strip on the back of your credit card instead, you are more susceptible to fraud. The data found on the magnetic strip makes it easy for the fraudsters to replicate.
” According to a report by Sumup, the first EMV chip card was issued in 2010 to provide an extra tier of security and to create a globally accepted card.”
A year later, about 1.6 million users were given the chip and PIN debit cards. Globally in 2020, approximately 66.4% of credit cards were EMV chip-based because the authentication process in these cards is more accurate.
Today, credit card security comes in layers, with each new layer offering added security. If the hacker gets past the first layer, they have to pass through more layers to reach the sensitive data.
However, EMV chip cards are not enough; the data that the readers access has to be encrypted.
Why are EMV Cards more Secure than Other Traditional Cards?
EMV is a small, metallic square that you see on your credit and debit card. Unlike traditional cards that use magnetic stripes, an EMV card chip creates a unique transaction code, which is only used once.
Magnetic stripes on the credit and debit card store static data, which means that the sensitive information remains the same. This can be problematic if the card gets stolen or lost. This makes credit/debit cards the target for the counterfeiters who misuse the card and steal the cash. If someone copies a magnetic strip, they can easily replicate the data from it.
On the other hand, EMV cards create a unique transaction code, which cannot be used again. This means, if someone steals the chip information, the card duplication will not work because the stolen transaction number created at the point will not be used again. Additionally, the EMV technology will not prevent any data breaches but will make it hard for criminals to make use of such cards.
The Benefits of EMV Chip Technology for Payment Security
EMV chips bring more security to card and mobile payments. Chip card technology works with payment acceptance devices compliant with EMV chip and PIN standards, which helps prevent fraudulent transactions that may take place while swiping a card at the payment terminal.
Cards with EMV chip technology have more sophisticated encryption with a fully operating computer system embedded right into the chip. As soon as you insert the card into the payment terminal, the chip and the card reader communicate to ensure that it’s ‘you’ who’s paying. It is followed by on-screen instructions that further validate the transaction. The online processing begins only after proper authentication that adds payment security.
Furthermore, the EMV chip is tamper-proof and is impossible to clone. Unlike the cards with magnetic stripes, the data on EMV chip cards constantly changes, making it difficult for the fraudsters to lift sensitive information. To get your bank information, they would have to get into the chip circuit, which is difficult.
Even better… EMV systems can operate in offline mode, a feature that magstripe cards don’t support. Terminals are configured to accept offline PIN codes, which microprocessor smart chips verify. Once the PIN is verified and a cryptogram is created, the transaction is processed. This way, cards with EMV chip technology are a shining example of safer and more secure electronic payments to protect both businesses and customers and to prevent potential frauds.
Reasons Why EMV Chip Technology Is Growing
The EMV cards market is expected to reach up to $978.55 million by 2025. This market growth is attributed to the growing need to comply with EMV regulations.
With the rising number of payment fraud cases, the government and financial bodies are focusing more on regulating payment methods.
Banks and merchants are investing in EMV cards and supporting EMV compliant payment terminals. The surging awareness of the benefits of EMV cards will boost the EMV chip technology growth in the coming years. Here’s why:
EMV technology is more secure than the legacy credit cards that come with a cloneable magnetic stripe. To process transactions, one needs to dip the EMV cards into a dedicated chip reader. These chips are so tough to copy that they offer better fraud protection.
The liability rules are the main driving force behind the growth of EMV chip technology. Banks and merchants are incentivized to upgrade to more secure EMV technology. If they fail to do so, they will be liable or exposed to losses if some fraud occurs.
Nowadays, EMV cards come with NFC technology for contactless payments. Instead of swiping the card at the terminal, one can simply wave it across the card reader for faster and more secure transactions.
With customers now understanding the importance of secure payments, switching to EMV technology is the need of the hour. It helps improve customer experience.
How do I Accept EMV Chip Card for In-Store Payments?
EMV chip technology is inherently capable of storing far more information than cards with magnetic stripes. With this technology, cards can hold encrypted data and protect against in-store fraudulent cases. Accepting in-store payments with EMV chip cards is quite easy.
Here is how to do it:
If you are a merchant, all you need is a credit card machine capable of reading the EMV chip technology. For this, you don’t have to invest in multiple terminals. EMV terminals have NFC technology for contactless payments, which allows you to accept wireless payments made with EMV cards or mobile wallets. Also, these EMV readers have a magnetic stripe slot for payments made with cards.
The best thing is, you don’t have to invest in a POS terminal to get started with accepting EMV payments. Nowadays, merchants can use android or ios apps and easily turn their existing smartphones into credit card readers for processing via EMV chip technology. As a customer who wants to make payments via EMV technology, all you need is a credit card with an EMV security chip.
How does EMV Chip Technology Affect the Merchants?
Millions of merchants now accept EMV chip technology, and the number is going to increase in the coming years. Merchants appreciate the way EMV technology can help reduce fraudulent payment cases.
Moreover, they are aware of the fact that they may face penalties if they don’t comply with the liability laws.
If the merchants still don’t upgrade to EMV chip technology, they are bound to become easy targets for the criminals. All cardholders haven’t received updated, EMV-enabled credit cards. However, this isn’t something a merchant has to worry about. If they have already made a switch to the EMV technology, they are not liable for any fraud. Making an upgrade to this technology is a bit expensive. But the merchants would face far greater costs if they get stuck with future credit card losses.
Many merchants also worry that EMV technology will affect online payments. The good thing is, e-commerce merchants can continue using the current payment gateway without any changes to the checkout process as EMV credit cards and legacy plastic are the same while shopping online. So, customers can make CNP transactions that don’t need EMV chips or magnetic stripes.
How about Switching to EMV Chip Technology for Customers?
Well, customers should absolutely switch to EMV chip technology. Just like the way EMV technology protects merchants, businesses, banks, and other financial institutions, it also protects customers. When a customer makes payment via an EMV-enabled card at the checkout, there are fewer chances of the card being left at the counter. This reduces the risk of potential ‘in-house’ frauds liable to the employees.
EMV cards create unique transition codes and provide the users with peace of mind. They can make in-house purchases without any worries, knowing that they are protected with EMV chip technology. Since mobile wallets are the latest trend in the payment industry, EMV-supported mobile transactions allow multiple payment options for customers. They can choose any option and make payment without getting worried about security issues.
EMV Chip Cards – FAQs
Qn 1: How do I use an EMV card to make a purchase?
Just like magnetic-stripe cards, EMV cards are processed for payment in two steps: card reading and transaction verification.
- EMV involves ‘card dipping’, which means inserting your card into a terminal slot and waiting for it to process.
- When an EMV card is dipped, data flows between the card chip and the issuing financial institution will verify the card’s legitimacy and create unique transaction data.
Qn 2: Is card dipping the only option?
Not always. EMV cards can also support contactless card reading, also known as near-field communication. Instead of dipping or swiping, NFC-equipped cards are tapped against a terminal scanner that can pick up the card data from the embedded computer chip.
Qn 3: Do I still have to sign or enter a PIN for my card transaction?
Yes and no. You have to get through the verification methods, but it depends on the verification method tied to your EMV card, not if your card is debit or credit.
Chip-and-PIN cards operate just like the checking-account debit card you have been using for years. Entering a PIN connects the payment terminal to the payment processor for real-time transaction verification and approval.
Qn 4: If fraud occurs after EMV cards are issued, who will be liable for the costs?
If an in-store transaction is conducted using a counterfeit, stolen or otherwise compromised card, consumer losses from that transaction fall back on the payment processor or issuing bank, depending on the card’s terms and conditions.
EMV isn’t a fraud cure-all. But EMV does represent the state of the possible and shows that coordinated action around technology can and will make for a more secure world for electronic payments. Connect with one of your payment experts to learn how upgrading to EMV is fast, convenient, and affordable way to help protect your business.