What is EMV?
Simply put, EMV is a security standard for payment cards and mobile card payments.
Named for its founders (Europay, MasterCard, and Visa), EMV defines a set of security standards for credit and debit card transactions that can be used for NFC mobile payments, too. Commonly referred to as “EMV cards,” or “EMV credit cards,” these cards use a smart chip instead of a magnetic stripe to hold the data that is required to process a transaction.
A smart chip has the power of a small computer, allowing it to run applications that can perform advanced authentication. The chip’s processing power, along with its capacity to store more information than a magnetic stripe means that EMV cards can hold encrypted data, perform cryptography, and generate a unique code that is assigned to each transaction. This code is key to fighting fraud because it must be generated by the chip and cannot be used for more than one transaction.
It’s virtually impossible to make a counterfeit EMV card because the chip is extremely difficult to tamper with or clone, which has resulted in reduced counterfeit fraud wherever EMV has been implemented.
Why EMV and Why Now?
EMV has been implemented in more than 80 countries, making it harder for fraudsters in those countries to commit counterfeit fraud. Unfortunately, fraud is migrating to the U.S. because magnetic stripe cards are easy to clone and vulnerable to fraud. As the last G20 to adopt EMV, the U.S. has essentially become the weakest link in counterfeit fraud.
Credit card fraud has doubled in the U.S. over the past 7 years (2007 to 2014). According to
Aite Group, fraud rose from 5 to 10 basis points, or 10 cents out of every $100 transacted. Debit card fraud has increased dramatically, too.
Driven to reduce fraud, the U.S. began to migrate our payment cards to EMV in 2013, and 2014 has seen even more traction. Experts estimate that 100 million EMV cards will be issued in the U.S. by the end of 2014, with Javelin Research estimating that
271 million EMV cards will be in circulation by the end of 2015.
Visa, MasterCard, American Express, and Discover have announced plans to accelerate the adoption of EMV in the United States. These major card brands all announced similar Fraud Liability Shift plans that are designed to incentivize both issuers and merchants to implement EMV technology.
Learn more about the Fraud Liability Shift
With market penetration of EMV technology deployment growing around the world, in particular the nearly 100% coverage in portions of Europe and Canada, magnetic stripe technology becomes more and more archaic. Millions of U.S. cardholders have been inconvenienced abroad over the last few years by attendants at POS refusing to take their cards and even more by not being served at unattended terminals.
Is EMV compatible with contactless and mobile payments?
Yes, EMV comes in many forms – contact EMV (cards), Contactless EMV (cards), and Mobile EMV (for mobile payments). NFC mobile payments are based on the same technology as EMV, so the investment that the industry makes today will help to accelerate mobile and contactless payment adoption, too.
The time has never been better for contactless, mobile, and traditional EMV payments to converge, as the entire merchant ecosystem is set to upgrade to EMV terminals. Implementing EMV chip technology in the United States will speed up mobile and contactless payments and make them more secure, and vice versa. The devices that accept EMV chip cards are dual contact/contactless devices. By installing these devices to accept EMV, merchants are also readying themselves to accept mobile and contactless payments as well.
How Do EMV Cards Work?
EMV cards do everything that magnetic stripe cards do, but more securely. The new chip cards are used a little differently at the payment terminal. Instead of swiping, an EMV card needs to be inserted into the terminal and remain there while the transaction is completed. Some cards will require a PIN, and some will require a signature.
Contactless cards are even easier to use and produce the fastest transactions. The card is simply tapped on the payment terminal, even if it is still in your wallet, and the transaction is completed.
Mobile EMV uses the same Tap & Go convenience. With Mobile EMV, customer’s card details are loaded onto their mobile phone or tablet. These payments are just as secure as all EMV transactions, with the convenience of a mobile wallet.
Mobile EMV and NFC: Going beyond the checkout experience
Karen Webster of PYMNTS.com and Philippe Benitez, a Gemalto veteran of EMV and contactless technologies, provided some insight into the possibilities that EMV and NFC bring to world of transactions.
Watch the webinar