EMV is an acronym for the 3 companies who came up with smart card security standards: Europay, MasterCard, and Visa.
The EMV Chip standard they came up with is a set of guidelines for chip and PIN payment cards. (Read about that standard here.)
In essence, EMV makes your sensitive credit card information more secure. It’s a new standard of security. The EMV chip encrypts your sensitive information during a transaction better than the traditional magnetic strip.
What is different about EMV cards compared to the regular stripe cards we’re all used to?
Traditional card transactions are relatively unsecured. This is because the card terminal and the bank process only two pieces of information. Those are the card’s number and expiration date.
Now we have a new, better level of encryption with the chip card. With these new cards, each transaction contains several pieces of information instead of two.
All the dozens of pieces of information exchange between the card, the terminal, and the bank.
This process involves a lot of encryption. This is why an industry-wide transformation has been taking place. Technology is updating on all fronts.
There’s more. Not only are there dozens of pieces of information in each chip card transaction. Now, each and every transaction you make with your chip card is unique. The EMV chip inserts a cryptogram onto every one!
This is how the chip fights fraud.
Before, a fraudster could duplicate a transaction with the right technology. But with the unique cryptogram on each chip card transaction, those days are almost gone. The cryptogram makes each transaction unique. So he’s blocked at every turn!
EMV cards help prevent the fraudulent practice of “card skimming.” This is when the the fraudster reads the credit or debit card information from the card’s strip. The card holder wouldn’t know this happened, of course. No one freely gives out there card information. It would be the same as giving away your hard earned cash.
The technology which skims these cards is pocket size and the culprit only needs to be a few feet away from you.
Here’s a story to illustrate: The author of this article once had his card skimmed. I caught it in time, for whoever skimmed it bought a soda pop at a fast food restaurant in another state than I was in!
I called the bank immediately to cancel the card. The representative said these crooks will often test the card on a small amount first. Glad I caught it right away…
Guess what card the bank issued me after they canceled that one?
You got it. An EMV chip card!
When the fraudster took my card information, they likely “transplanted” it onto a blank card of their own.
This is “card transplant” fraud. Once the information is transplanted, the purchasing spree begins for the criminals. They will withdraw money from an ATM if it is an ATM card they transplanted.
The chip technology helps prevent all this. But it’s not just “card-present” transactions this new tech effects. “Card-not-present” transactions also are more protected.
Examples of “card-not-present” transactions are purchases on the Internet or over the phone.
Before, traditional cards required visual confirmation for authorized use. So, if the card went missing or stolen, you’d have to cancel it. But “card skimming” technology made just holding on to your card as a security measure less effective.
Now, with EMV chip cards, we have encryption and tokenization for security. These advanced technologies make for advanced security credit cards. Far more effective than having to match signatures!
The embedded chip on each card communicates with the device upon sale. It also communicates with the bank or processor.
Because of this, there is an industry-wide revamp of technology. All point-of-sale devices, ATMs and bank technology are going through a major overhaul.
But this overhaul is almost complete.
As of October 1st, 2015, all businesses are required by the financial institutions to be capable of accepting EMV chip cards. If they’re not, the business — not the bank — is liable for any fraudulent transactions done with an EMV card.
While it costs a lot to upgrade… new technology, replacing equipment (think ATMs and card readers all across the country)… the cost of fraud to the banks and to cardholders is reducing.
Once EMV chip technology has been in use for a while and it’s the norm, everyone will be able to breathe easier. And fraudsters will have to find something more productive to do!
To learn more about the products and services offered by RedFynn, call us! 888-510-9871. We’re happy to answer any questions you have.