Tag Archives: Europay

What is EMV Chip Card Technology?

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EMV® is a worldwide standard for credit and debit card payments based around the use of chip card technology. The acronym stands for Europay, MasterCard, and Visa, who collaborated to create the technology. The goal of this project was to create a card that worked based off of a microprocessor chip that is read by the payment terminal.

How it works

The transaction has a built in verification system that requires both the chip in the card and a PIN number the customer enters. This extra step verifies that the person with the card is in fact authorized to use it. This is just the first facet that makes these transactions more secure. Each chip contained in the card generates an original and unique code for each transaction. This unique identifier makes it easier to track transactions and identify fraud.

Comparison to Existing Magnetic Stripe

Everyone knows the magnetic stripes exist on almost every single card in the U.S. currently. These pass very simple data through the system at the time of the swipe, mainly just card number and expiry data. The data passed back and forth between the terminal and chip card is much more sophisticated and encrypted for added security. Another downside to the magnetic stripes is their shelf life. Many frustrated clerks can tell you that a card that is used often does not usually make it to its expiration date. Merchants should know that they need to swipe the card to get the lowest interchange rates for most cards. Often times, front line workers do not know that the business is paying a higher rate if the card is keyed as opposed to swiped.

Future Growth

EMV is already widely used worldwide. As of Q4 2012, there are roughly 1.62 billion EMV cards in consumers’ hands. Combine this with the 23.8 million terminals that have been deployed throughout Europe, Asia, and Africa and it’s easy to see that this technology is here to stay. HMS fully supports EMV processing and works with merchants to offer this to their customers. With Visa and MasterCard poised to really step on the gas concerning U.S. migration, merchants need to be up to speed on the new processes and technologies.

EMV-chart

This upgrade in technology will have an impact on a wide range of hardware including:

  • ATMs
  • Existing POS machines
  • Vending machines
  • Automated fuel pumps
  • Ticketing kiosks
  • Etc.

While replacing the vast amounts of existing hardware might seem daunting on a macro level , the time and capital committed to this migration is absolutely worth it when you consider the upside. The combination of both new terminals and chip cards will reduce risk for both consumer and business. Also, by making chip cards more universal, American tourists who travel abroad will have a consistent experience and won’t need a “special card” for overseas trips. This point is even more powerful when you consider that there are roughly 56 million trips outside the country by U.S. citizens just in 2012. So send us an email or better yet just give us a call at 877-517-4678 to discuss how Host Merchant Services can help your business stay ahead of the EMV curve.

Industry Terms: EMV Cards

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This is the latest installment in The Official Merchant Services Blog’s Knowledge Base effort.  We want to make the payment processing industry’s terms and buzzwords clear.  We want to remove any and all confusion merchants might have about how the industry works.  The Host Merchant Services promise, we deliver personal service and clarity.  So we’re going to take some time to explain how everything works.  This ongoing series is where we define industry related terms and slowly build up a knowledge base and as we get more and more of these completed, we’ll collect them in the resource archive for quick and easy access.  Today’s term is EMV,  or chip-based cards.

Europay, MasterCard, Visa (EMV)

EMV cards, also known as smart cards, were developed and backed by four of the major card brands.  First implemented in Europe, the cards rely on an imbedded microchip to send and receive payment data with a merchant’s EMV-enabled terminal or POS system.

The chips, only about 3 by 5 mm in size, transmit unique numbers to the payment processors each time the cards are used.  This increases the security since the customers’ name and signature are not used or stored.  Making the chip-based cards unaffected by breaches.

These cards have been used in Europe for more than a decade and have appeared in Canada as recently as two years ago.  So what’s holding the United States up?  That’s right, you guessed it, the price tag.  Javelin Strategy & Research estimates the cost of deployment for EMV in the U.S. at about $8.6 billion.  The major card brands, however, have decided to make the push from the current magnetic strip standard, to the more secure form, EMV.

AmEx joins the club

In late June, American Express announced that it would be joining Visa and MasterCard, in requiring the chip-based cards.  Visa began an aggressive push last year for EMV cards; the company claimed more than a million of the cards were in circulation at the end of 2011.  AmEx, however, will require they be implemented in April 2013, instead of the 2015 mandate set by Visa and MasterCard.

Fraud Free

You may find yourself asking, at such a large implementation cost, are EMV cards really worth it? The answer is yes!  The savings comes in the form of decreased fraud.  The chip-embedded cards are much harder to duplicate than their magnetic strip enabled counterparts.  Criminals can modify or replace the information on mag-stripe cards easily.  Whereas the signals EMV cards give off, cannot be duplicated.

Fraud in the United States amounted to more than $3.56 billion in 2010.  Globally, the U.S. contributed to about 27% of payment-card purchases, yet accounted for 47% of global payment-card fraud.

In summary, EMV cards are coming to the U.S. whether merchants want to accept them or not.  The cost to implement them may cause a bit of a sticker shock, but the long-term benefits of virtually eliminating card fraud heavily outweigh it.  The decreased fraudulent charges will eventually translate into more savings for you, the merchant.