As secure payment methods are now essential to protect consumers and businesses, EMV has become a standard for chip-based debit and credit card transactions.

Understanding EMV technology is critical as it plays a pivotal role in reducing fraud and enhancing transaction security.

What is EMV?

Europay, Mastercard, and Visa created EMV technology to enable businesses to process credit card payments securely. Thanks to its robust payment security, EMV is now widely recognized as the standard for credit card payments.

EMV cards, often referred to as chip cards or smart chips, contain microprocessor chips that securely store and encrypt data. This chip technology is a significant upgrade over the older magnetic stripe cards, which are more vulnerable to fraud.

Now that you understand the foundation of EMV, the following section will discuss the various payment types associated with these transactions.

4 types of EMV transactions

There are several types of EMV transactions, each serving as a different method of interacting with the payment terminal or online portal.

Here are four common types of EMV transactions to know:

1. Card-present (CP) transactions: CP transactions typically involve chip and PIN or chip and signature. With chips and PINs, cardholders insert their EMV chip card into payment terminals and enter PINs to authenticate their transactions. This method is common in many countries and adds a layer of security. Whereas the chip and signature method involves cardholders signing receipts to complete their transactions. While this method may be outdated, it’s still used in some regions.
2. Contactless EMV payments (Tap-to-pay): With contactless payments, also known as Near Field Communication (NFC) payments, the cardholder taps their EMV chip-enabled card on a contactless-enabled terminal. This method is faster and often used for smaller transactions.
3. Mobile wallets: EMV can also be used via mobile wallets when linked to an EMV-enabled card. These transactions use dynamic tokenization, a one-time-only cryptographic code or token for enhanced security.
4. Card-not-present (CNP) transactions: While EMV technology is primarily used for in-person transactions, there are developments in using EMV-based authentication methods for online CNP purchases, thanks to security protocols like 3D Secure for additional verification.

Each transaction method maintains enhanced security features inherent to EMV technology to mitigate fraudulent charges and counterfeit card usage. Businesses should ensure their card readers are equipped to handle these EMV transactions to protect their infrastructure and consumers against these threats.

Now that you know what EMV transactions are, you can learn how this software works.

How does EMV work?

Understanding the technical side of EMV transactions will help you secure your payment processing operations, reduce or eliminate fraud risks, and comply with industry standards, protecting your business and its customers.

Here’s how EMV works:

1. Card insertion or tapping: The transaction begins when the cardholder either inserts their EMV chip card into a payment terminal or taps it for contactless payment.
2. Data transmission: The EMV chip generates a unique, encrypted code (called a cryptogram) for the specific transaction. This code is dynamically created, meaning it changes for each purpose, making it harder to replicate or clone the card.
3. Authentication: The payment terminal communicates with the bank or payment processor to confirm the card’s authenticity. This involves verifying the unique transaction code generated by the chip and validating that the card isn’t counterfeit.
4. Cardholder verification: Depending on the EMV transaction type, cardholders are asked to verify their identities by either entering a PIN or providing a signature. In contactless transactions, verification may not be required for small amounts.
5. Transaction approval or denial: Once the bank or payment network verifies the cryptogram and confirms if the account has sufficient funds, it sends an approval or denial back to the terminal. If approved, the transaction is completed.

Using these advanced cryptographic techniques and dynamic data, EMV enables more secure card transactions than traditional magnetic stripe technology.

What are the benefits of EMV technology?

Along with the significant security enhancements it provides to combat fraud, EMV chip technology offers numerous benefits for various industries and consumers across the globe.

Here are six benefits of EMV technology:

• Dynamic data security: Dynamic data is one of the key benefits of EMV. Since each transaction generates a unique cryptogram, it prevents fraudsters from reusing stolen card information, as the same code can’t be used again.
• Global acceptance: EMV cards are the standard for credit cards worldwide, meaning travelers can use them internationally with fewer issues.
• Versatility: EMV technology supports multiple payment methods, including chip, contactless, and mobile payments. It can be used in various environments, such as retail stores, ATMs, and online transactions, making it adaptable to global payment systems and devices.
• Reduced liability: Merchants who adopt EMV technology are less likely to be liable for costs associated with counterfeit or fraudulent CP transactions.
• Consumer confidence: Customers feel more at ease using these cards thanks to their reliable security measures, thus leading to more trust and loyalty.
• Future readiness: EMV’s secure infrastructure helps businesses stay updated on payment trends, reducing the risk of fraud and making it easier to adopt emerging technologies.

EMV technology represents a step forward in protecting all parties during the payment process from the costs and consequences of fraud. Despite its robust security, EMV isn’t always enough to keep threats at bay.

The future of EMV technology

Looking ahead, the future of EMV technology is focused on further bolstering secure payments.

EMV technology can achieve this with:

• Contactless payments: The adoption of contactless cards and mobile payment systems leveraging EMV chip technology is expected to grow, providing a faster and more secure way to conduct transactions without physical contact.
• Biometric authentication: EMV cards may be paired with biometric verification, such as fingerprint recognition, to add an additional layer of security and combat fraudulent transactions.
• Global accessibility: EMV technology continues to expand into developing markets, striving to reduce fraud and counterfeit payments worldwide.

As EMV technology evolves, it will likely continue adapting its approach to enhance payment security, minimize liability for card issuers, and streamline online and in-person transactions.

Promoting more reliable payments

With its ability to protect against fraud, EMV ensures safer and more reliable in-store, online, or contactless payments.

EMV enables businesses to stay ahead of security threats and adapt to new payment technology and emerging trends in the financial industry. This knowledge also allows merchants to safeguard transactions, enhance customer trust, and streamline payment experiences.

FAQs regarding EMV

What if my EMV card doesn’t work in a terminal?

If an EMV chip fails or the terminal doesn’t support EMV, most EMV cards still have a magnetic stripe as a backup. However, it’s always safer using the chip is deemed safer.

Why do EMV transactions take longer than magnetic stripe transactions?

EMV transactions may take slightly longer since the terminal needs to communicate with the chip to generate and verify the unique cryptogram. This extra step enhances security.

What happens if I lose my EMV card?

If your EMV card is lost or stolen, contact your bank immediately to report it. While EMV cards offer better protection against fraud, unauthorized individuals may still attempt to use them, especially for online transactions where the chip isn’t required.