Understanding EMV Technology: Keeping Your Information Safe

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While the U.S. continues to transition to chip-enabled credit cards, consumers may have questions about how using their plastic will change. The biggest confusion seems to be if chip-enabled credit cards will be accepted the same as EMV cards when traveling abroad, and if they will need a PIN to finalize transactions. Our Understanding EMV Technology infographic will help you understand the basics of EMV-chip cards and how processing payments will work.

What is EMV?

EMV -an abbreviation for Europay, MasterCard, and Visa- is technology placed in a debit or credit card that helps secure your banking information while transactions are being processed. It comes in the form of a small embedded chip located on the front of the card. The chips are able to encrypt your information, making it difficult for fraudsters to steal your personal information.

EMV cards can be either chip-and-PIN or chip-and-signature. Chip-and-PIN cards function just like debit cards, requiring cardholders to enter a unique PIN number. The PIN acts as another layer of protection for the cardholder. Chip-and-signature cards work like traditional credit cards by requiring a signature to complete the transaction. The majority of existing chip-cards in the United States are chip-and-signature cards because it is believed that this will make the transition easier for consumers. Down the road, there are plans to issue all EMV, or chip-and-PIN cards, to all cardholders which will replace their original issued chip-card.

Traditional Plastic vs EMV Plastic

The first-issued chip-enabled credit cards won’t differ much from your original credit cards that have a magnetic strip on the back of the card.

Mag-stripe cards are swiped quickly through a card reader or POS (point-of-sale) system and holds static financial data that can be reused for each purchase. Chip-cards are dipped into a POS device and will remain in the device for the duration of the transaction, which will change how consumers leave a tip on their credit card. EMV transactions create a unique transaction code for every single purchase, which can’t be duplicated or used again. The first-issued chip-cards can be dipped, swiped, or tapped to complete a purchase.

How EMV Processing Works

  1. Consumer makes a purchase with an EMV card by inserting the card into the merchant’s payment terminal.
  2. If you have a chip- and- PIN card, you will enter your PIN here.
  3. Be patient! The card must remain in the terminal until the payment processes successfully processes.
  4. This can also be achieved with near field communication (NFC), where the card and a special payment terminal exchange information wirelessly.
  5. While the card is inserted into the terminal or communicates via NFC, data flows from the information in the chip to the cardholder’s financial institution.
  6. The information about the transaction is encrypted to prevent fraud. The terminal submits an authorization request from the card issuer.
  7. The card issuer reviews the data, ensures it is authentic, and sends a response back.
  8. When the transaction is approved, the purchase is complete. If you have a chip- and- signature card, you must sign your name to complete the transaction

Fast Facts

  • Chip technology was first used in France in 1987
  • There are one billion EMV cards around the world
  • 70% of U.S. credit cards will be EMV-enabled by the end of this year
  • 41% of U.S. debit cards will be EMV-enabled by the end of this year
  • Only 22% of small-to-medium sized businesses reported they were prepared for the October 2015 deadline
  • Card-not-present transactional fraud, or online purchases, are expected to spike during this transition
  • Business owners who aren’t equipped with an EMV terminal will be held liable for any customer fraud

 

Find out more about EMV by checking out our Understanding EMV Technology infographic.

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