EMV cards have quickly become an integral part of keeping businesses and their customers secure. The chip cards work to protect businesses by decreasing losses related to card-present fraud and creating a safer payments ecosystem.
History of EMV
Europay, MasterCard, and Visa were the founding members of this standard, creating the name EMV in 1993. 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. Issuers in Europe adopted this standard 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.
It took until 2015 for the United States to start its EMV migration. Companies were slow to adopt the more secure payment system because of the expense and lack of synchronization among retailers, credit card providers, and banks. On October 1, 2015, a liability shift was created, businesses were required to be able to accept EMV cards or risk being liable for fraudulent activity if it were to occur, pushing for synchronization across the board.
EMV cards have now become the standard, as they are more secure and smarter transactions than a magnetic stripe or cash transaction.
EMV Cards are Safer
Previous methods using magnetic-stripe cards meant that cashiers had to look at the card and signature to verify a purchase. Information on these cards store data statistically, meaning that it can be pulled from the stripe with a simple piece of hardware.
The chip in the EMV cards provides stronger security for transactions through cryptographic algorithms, uniquely encrypting the data each time you use it. Authenticating your purchases are made easier with the use of a personal PIN number, instead of requiring a signature.
EMV cards provide a twofold confirmation during card-present transactions, using the physical card and the customer’s PIN. This verifies the cardholder, allowing the one-time-password (OTP) generated by the chip to be confirmed and approved. In situations of card-not-present purchases, these options are unavailable as the card won’t be in the merchant’s hands, making it easier to exploit than retail fraud. Some methods and tools for eCommerce sites to implement verification are to:
- Continue PCI compliance and follow the specific rules for data security and management.
- Verify card security codes.
- Use an address verification service (AVS).
- Analyze priority shipping requests (especially if free shipping is offered).
- Validate unusual orders from repeat and regular customers.
- Confirm the phone number and transaction information before shipping products.
- Take advantage of fraud prevention services available from credit card companies such as Verified by Visa or MasterCard SecureCode
Keeping a well-maintained authentication system will significantly reduce your business’ risk, while your customers enjoy the ease of purchasing your products with a business that establishes trust and security with CNP payments.
EMV Cards are Smart
Each one of the chips on an EMV card contains an embedded microprocessor, a type of small computer that provides strong security features and other capabilities not possible with traditional magnetic stripe cards. When you insert this card into a terminal, the reader is able to exchange data with the card easier. Contactless EMV cards allow for an exchange of data via radio frequency without the card ever leaving the customer’s hand. Research shows that contactless transactions are approximately 53% faster than a traditional magnetic stripe credit card transaction, and 63% faster than using cash.
As more transactions become digitized, it is important that businesses and their customers are educated on how they are transferring money and the tech behind these products that protect their payments.
Find out how Stax can help you join the next generation of digital payments.