By Julia Olson
A Brief History of EMV Technology
If you’re a business owner, you’re probably well aware of EMV cards, also known as chip cards, as they’ve become a standard in the United States over the past year. In fact, in October 2015, businesses were required to be able to accept EMV cards or risk being liable for fraudulent activity if it were to occur. Although chip cards are much more secure than the traditional magnetic strip, a lot of business owners are frustrated in the change of hardware and seemingly slower transaction times for these cards.
Chip cards have an immense value, and despite their hang-ups, are an essential part of keeping your business and your customers secure. For a little more context to this technology, here is a brief history of how EMV came to be, and just what makes these cards so much more secure.
EMV gets its name from the credit card issuers that founded this standard: Europay, MasterCard and Visa. They started working on EMV in 1993 and were later joined by Discover, JCB, UnionPay and American Express to form EMVCo. The first version of EMV came out in 1994, although it took a few years before it saw widespread use across Europe. An EMV card is characterized as a smart card, with an integrated chip that interacts with POS systems for authentication.
Why Did EMV Start in Europe
Credit cards were gaining popularity in Europe and the United States during this time frame, but the EMV standard appealed to European issuers more because phone line card authorization was prohibitively expensive for them. Due to international call rates, the cost was 80 to 90 percent higher in Europe to authenticate cards.
EMV Migration to the United States
The United States started its EMV migration much later than Europe. Rising concerns about magnetic-stripe credit card fraud motivated this market to look into better security measures. Many card issuers switched over to the EMV standard and put a liability shift deadline in place as of October 1, 2015. This change made merchants processing cards liable for fraud when they use the backward-compatible magnetic stripe on EMV cards, rather than dipping it into a compatible reader.
EMV Security Features
The authentication method used by EMV makes it more difficult for scammers to fake these cards. The chip encrypts the information sent to the card issuer and automates card verification. In contrast, magnetic-stripe cards require a cashier to look at the card and verify a signature. Information on magnetic-stripe cards store data statically, which means the information can be pulled from the stripe with a simple piece of hardware. Chips uniquely encrypt the data each time you use it, making it impossible to pull at the time of transaction. Fraud rates drop dramatically for in-person transactions with this technology, which makes the purchasing process better for customers.
While chip cards do take longer to process than magnetic-stripe cards, the slight delay is well worth the benefit of protecting consumers against credit card fraud. Fattmerchant offers EMV-compliant technology that you can put in place to let your customers know that you’re thinking about their financial safety. Plus, you’ll be avoiding the cost associated with fraud liability. The goodwill and trust you generate with this move is a big boon to your business in the long term.
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