With the surge in online transactions worldwide, customers are becoming more particular in how they participate within the payment ecosystem. Specifically, they are demanding two qualities that are absolutely non-negotiable: security and convenience.
EMV Specifications are answering the call, addressing the issues by filling in the security gaps.
What Are EMV Specifications?
EMV is the abbreviated name of Europay, Mastercard, and Visa. These are the three companies known to have created the standard for retail POS terminals to accept chip cards. Other names for chip cards include smart cards or stored value cards. Stored within the chip is an algorithm or formula. For maximum security, all chip card transactions are PIN-based.
The EMV standard is now being managed by EMVCo, which is an association, with control split equally among American Express, Discover, China UnionPay, Japan Credit Bureau (JCB), Visa, and Mastercard. Among EMCo’s associates include banks, retailers, payment processors, financial institutions, as well as other credit card companies. These associates contribute strategic as well as technical information to EMVCo.
What Are Its Benefits?
For Card Issuers
Without a doubt, mitigating fraud is the biggest benefit for using EMV. It specifically tackles these problems: the abuse of lost or stolen cards and the counterfeiting and cloning of cards.
By its very nature, EMV cards cannot be counterfeited. Even if it were possible, it would not be “economically feasible.” Counterfeit cards have been historically reproduced using magnetic stripe cards, which are no longer available. Those countries that have adopted the use of EMV cards have seen a dramatic drop in fraud.
The abuse of lost and stolen cards has been thwarted through the use of a PIN number. It can be verified online using a “issuer host system” or offline within the EMV chip itself. By using the EMV card, fraud can be drastically reduced by essentially “blocking” the card application when the transaction makes its way online to the issuer host system.
Retailers also greatly benefit from this technology. By using the EMV chip-and-PIN transactions, the cashier at the retail store does not need to verify the signature or verify the card. In fact, the cashier doesn’t even need to touch or see the card itself.
In addition, the POS terminal does not need to print out another receipt in order to get a signature. The retailer has no need to collect and store these signed receipts or recover them in order to handle disputes of transactions.
How Does It Work?
The EMV cards offer something that everyone in the payment space is desperate for…security. The smart card chip is basically a small computer that is equipped with a microprocessor with some memory and application software. A smart card is difficult to hack, unlike the magnetic stripe card. It also has a “secure vault” that has keys unique to each card, thereby protecting all your transactions.
For each transaction, the EMV cards generate a unique code that your bank then validates. This code cannot be reused.
A scammer cannot initiate a transaction using a fake card with the stolen data at an EMV terminal since it wouldn’t generate the right code.
The type of security that EMV employs is an advanced level of cryptography. It produces the transaction codes that facilitate the terminal to verify the card. It is built on a private key infrastructure, which means that only a “personalized chip card”, using the cardholder’s private key during manufacturing can produce a valid transaction.
The Future Of EMV
Online commerce continues to evolve at a rapid pace. With that evolution comes new challenges to overcome, especially with fraudsters becoming more sophisticated with their attacks.
EMV specifications continue to develop to meet these new challenges head on.