Effective October 2015, the U.S. has been mandated to adopt the chip and signature standard, also known as EMV (Europay, MasterCard, Visa). EMV refers to a smart-chip technology that is intended for payment cards. The technology is developed by Europay, Mastercard, and Visa. EMV technology is used to validate cards. EMV cards have a microchip embedded in them that forms a dynamic authentication code for every transaction.
How Does EMV Verify Cardholders?
The cards can be verified with an online PIN and in such cases the PIN is encrypted, and the card issuer verifies it online. The verification can also be through an offline PIN by the EMV chip card. Another way is to compare the cardholder’s signature on that is on the receipt to that at the back of the card.
EMV validation puts together several personalization elements. They can be two or three-dimensional personalization elements. EMV validated cards incorporate the third personalization dimension where the payment information is stored on a secure chip. The individualization is done using issue-specific keys, and this makes the transactions secure.
It is deemed to be more secure than the conventional magnetic stripes. It utilizes a type of cryptography to verify the card and guard the delicate information that is on the chip. A retailer needs to use a unique card reader that is EMV-enabled to gain access to the data that is on the chip. When a cardholder puts the EMV card into the EMV-enabled reader for a transaction, the terminal recognizes any restrictions on the card processing like the expiration or geographical limitation in which the card can be in use.
With the information in the chip, the terminal can validate the EMV card by accessing the protected data. It analyzes if the EMV card can be used for a particular transaction and also determines whether it is important to contact the card issuer online so that they can grant authorization.
EMV validation has several benefits.
- It prevents counterfeit fraud during card-present transactions. If a fraudster steals the data on the magnetic stripe of your payment card, they can embed the data in another magnetic stripe, use it on a plastic card and use the fake card to purchase an item in the store. EMV validation curbs this since the thief cannot duplicate the dynamic code the chip generates.
- It also allows for EMV-compliant chips to be embedded into other devices apart from plastic cards. The platform helps with the adoption of innovative contactless payment technology, mobile payments, and hardware devices.
- The user data is also less vulnerable with EMV validated cards since the dynamic data is useless if stolen since it is just used for the single transaction it characterizes.