What is EMV?

"EMV" is the acronym, or abbreviation, used to describe the new global technology standard for processing retail credit, and debit card transactions created by Europay, MasterCard, and Visa. EMV is the next step in the evolution from swiping transactions with a traditional magnetic strip to a more secure "smart chip" technology. EMV technology has already been in use in many other countries around the globe for quite some time and has finally arrived in the United States.

EMV Card

EMV is an added layer of protection for business owners and their retail customers. EMV cards contain an embedded microprocessor that provides extra security and other capabilities not available with traditional magnetic stripe cards. EMV has been proven around the world to reduce the rate of fraudulent face-to-face transactions at the point of sale. Today, the acceptance of EMV payment transactions worldwide is facilitated by American Express, Discover, JCB, MasterCard, UnionPay, and Visa together as EMVCo.


How does EMV Work?

Swiped debit and credit card transactions are processed using information contained in the magnetic stripe located on the back of a card. EMV credit and debit card transactions are processed using information contained in what is known as a "smart chip" embedded directly in the card itself. Rather than swiping an EMV card, the card can either be inserted, referred to as "dipped" or tapped onto an EMV capable device to run the transactions using contactless Near Field Communication (NFC) radio technology.

EMV Card Reader

  1. Insert the EMV card into the smart card reader on an EMV capable credit card terminal or PIN pad.

  2. The card should remain in the device until the transaction processes.

  3. Once the device indicates the transaction is complete, you may remove the card

The metallic square on the front of an EMV contact card is known as the card's "contact plate". A microprocessor chip is embedded directly behind the contact plate, so that when the card is inserted into an EMV capable device the contact plate activates the smart chip reader and enables the exchange of data between the card and the terminal.

EMV with NFC radio technology

NFC EMV works by holding a contactless, chip-enabled card or smartphone within proximity of the a contactless EMV capable device. The smart chip reader uses radio frequency to communicate with the chip embedded in the card or the smartphone, which allows the exchange of data between the card or smartphone and the device.

EMV NFC

  1. Tap an NFC card or smartphone on an EMV capable device that has a contactless reader.

  2. Listen for a beep and blinking lights to indicate that the card information was read successfully.


Is EMV better?

Outdated magnetic striped cards contain static cardholder information that is used repeatedly for every transaction ran on that card. If the information stored in the magnetic stripe was stolen, either through accidental loss, theft, hacking, phishing, skimming, or unauthorized access to business records, the card information can be used to make duplicate credit cards, issue new cards in someone else's name, drain bank accounts, and make fraudulent purchases. While the true cardholder certainly faces the nightmarish burden and expense of falling victim to one of these crimes, the owners of the businesses that unknowingly process fraudulent transactions are victims of these crimes as well. Business owners are not only liable for the loss of goods and services sold to a fraudulent purchaser, they are held liable to pay the credit card companies the transaction amount that was charged during the fraudulent purchase. In some cases, the business must also cover substantial, sometimes devastating fines levied by the credit card companies themselves for knowingly accepting a fraudulent transaction.

Mobile Pay

EMV cards, on the other hand, incorporate cutting-edge computer chip technology into the credit and debit cards themselves that generate a unique one-time code each time the card is used to make a purchase. This constantly changing code cannot be reused by thieves, because the code becomes obsolete with each and every purchase. This makes EMV cards far more secure than their magnetic striped predecessor. In addition to the increased protection that EMV cards provide, the equipment and devices used to process EMV transactions include further advancements in technology that supports a number of revolutionary payment types, including Apple Pay and Google Pay.

This is not the last transition in added security reading EMV cards. While the world and everything in it may remain unpredictable, the one thing we can count on in the payments industry is that things will always change. October of 2015 was the first step towards the U.S. transition to EMV. This first step covers EMV "Chip and Signature", whereas the rest of the world has already adopted "Chip and PIN" technology. This means yet another imposed EMV transition to Chip and PIN is inevitable and not that far off.

Once Chip and PIN technology becomes the standard nationwide, we can likely expect to see more new technology, such as additional security measures and other advancements as the industry continues to evolve in ways to protect businesses, business owners, and the clients they service.


Does EMV affect me?

EMV cards represent dramatic increase in protection, not only for cardholders and businesses owners, but for credit card issuers themselves. It is not surprising the bank card issuers are working at a rapid pace to replace every credit card and debit card in North America with cards containing the new EMV technology. At the same time, Visa, MasterCard, American Express, and Discover are imposing deadlines for hardware vendors, software providers, and credit card processors to issue all U.S. businesses with EMV capable terminals and equipment to process EMV bank cards. Although U.S. issued EMV cards will likely continue to carry magnetic stripes for some time in order to accommodate non-EMV capable terminals and equipment still in use, the old magnetic stripe technology has long since been abandoned internationally.

EMV Chart

The evolution of smartphones, smartwatches, and smart phone technology has led young, affluent customers to quickly adopt this new technology and many are already using these devices in place of traditional credit and debit cards. Meanwhile, certifications for old credit card terminals and equipment incapable of processing EMV cards or smart phone technology are expiring quickly. These devices are still in use by many small businesses, but are rapidly being declared obsolete by the banks, credit card processors, and equipment manufacturers with each passing day. With the industry now intent on ceasing the use of magnetic stripe technology, significant risks could be lurking right around the corner for business owners who fail to use the newer equipment capable of processing transactions with EMV or smart phone technology.

Smart Devices


Liability Shift

EMV and smartphone transactions processed on outdated credit card processing equipment renders the technological advances useless. Should this result in identity theft or credit card fraud, and be deemed preventable had the proper EMV and smartphone compatible equipment been employed, the business owner will likely face substantial fines in addition to being held liable for all costs, losses, and expenses incurred. More than 1 in 10 Americans have already been victims of identity theft and credit card fraud, costing more than $5.5 billion in losses, so new technologies will undoubtedly continue to be developed in order to keep ahead of this ever-expanding digital crime wave. As a result, equipment manufacturers will have no choice but to continue developing new and more sophisticated terminals, pin pads, and POS systems that incorporate these advances. This will undoubtedly shorten the usable lifespan of all processing devices and necessitate that businesses upgrade their equipment more frequently than ever before.

There is increased potential liability for those who don't upgrade. As of October 2015, a new rule is in effect called the "Liability Shift". This rule shifts the fraud risk from the banks and processors to business owners. In the event fraud occurs after October 2015 and is shown to be the result of a customer presenting an EMV card that was swiped on non-EMV compliant equipment, thereby using the magnetic stripe rather than EMV technology, the business owner will be held liable for all costs related to the resulting fraud. On the other hand, had the card been dipped or tapped using EMV compatible equipment, the business owner would not be held liable unless there were other contributing factors, like PCI violations.


Ongoing Battle

EMV does not solve everything by itself. EMV is an effective measure, but it does not entirely eliminate the risk of fraud. While the technology embedded in EMV cards certainly goes a long way to thwart identity theft, EMV is only used with card present retails transactions. One should never assume EMV is fool-proof, as more than 5.5 billing dollars is stolen each year as a result of identity theft and criminals will certainly keep diligently working to find more sophisticated way to acquire such information. Businesses can no longer afford not to stay vigilant and must remain on the lookout for fraud, while continuing to take security standards such as PCI seriously. In the near feature, the bank card industry will further increase the protection of their cardholders and business owners by issuing unique customer PIN codes that will further impede card theft attempts.


How can AGMS Help?

You may not need to upgrade immediately, but at least start planning. Every business is different. A business facing other critical priorities, or perhaps one that does not make card-present retail transactions, may be able to justify not keeping up with current technology right away. But EMV is evolving and should not be ignored forever. EMV done properly adds security, peace-of-mind, and ensures compliance with latest hardware security standards and acceptance technologies.

Weighing the potential consequences of not upgrading is much like a homeowner contemplating whether or not they should carry fire insurance for their home. While the odds of a home catching fire are ridiculously low, at the end of the day there's no way to fully eliminate the possibility of a home burning down and the homeowner losing everything. The relative cost of insurance is so small in comparison to the devastating possibility of losing everything, most reasonable people would agree that carrying insurance is the wise thing to do.

In much the same way, while the probability of fines and penalties from not upgrading to EMV technology may be inconceivable to some business owners now, the relative cost of upgrading to EMV technology is infinitesimal compared to the potentially devastating risks involved in not doing so.

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