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EMV : Next Generation

What is EMV?
EMV is a technical standard that ensures chip-based payment cards and terminals. They are also known as smart cards and are compatible around the world. EMV terminals can be contact or contactless. The name EMV comes from Europay, MasterCard and Visa, the companies that in 1994 initiated development of the EMV Specifications. Europay International SA became part of MasterCard in 2002. JCB joined EMVCo in 2004, and American Express in 2009.

How does EMV work?
A chip-based transaction occurs when a microprocessor embedded in a plastic card or mobile phone connects to an EMV-enabled POS terminal to execute a payment. The smart card technology provides an additional form of card authentication for the transaction—validating the legitimacy of the payment type being used and helping reduce the use of counterfeit, lost and stolen payment cards at ATMs and retail points of sale.

Why the migration to EMV?
Industry buzz about implementing an EMV-enabled payment infrastructure in the United States is becoming louder and more frequent. EMV provides the promise of reduced card payment fraud. It enhances global payments interoperability, and when combined with additional layers of security (like encryption and tokenization), it will undoubtedly benefit the entire payments value chain. As the U.S. payments industry considers the various options of chip card adoption, issuers and merchants are beginning preparations for this new era of payment acceptance.

What are the benefits of EMV?

  • Provides greater security against credit card fraud than cards that rely solely on data encoded in a magnetic stripe on the back of the card.
  • A transaction-unique digital seal or signature in the chip proves its authenticity in an offline environment and prevents criminals from using fraudulent payment cards.
  • A transaction-unique online cryptogram can be used to secure online payment transactions and protect cardholders, merchants, and issuers against fraud.
  • Supports enhanced cardholder verification methods.
  • Stores considerably more information than magnetic stripe cards.

When will EMV be deployed?
Visa and MasterCard have come out with directives on implementing smart card technologies, and more announcements will likely come. It’s important to note that there is no government-enforced mandate at this time; these roadmaps are an industry call-to-action. Merchants are starting their education process and beginning to formulate plans. To implement smart card acceptance, merchants would be responsible for upgrading/replacing their POS devices and would assume the cost of doing so.

What kind of equipment upgrades will EMV require?
As EMV is deployed, there will be procedural changes at the POS. Customers who are unfamiliar with the chip-based cards, phones and fobs will need to be shown the proper way to insert or tap their cards in or over the devices and then to authenticate their identification. Employees will need to understand these new procedures in order to help customers and to explain the security benefits as customers complain or ask questions.

There are positive implications for merchants as well. For example, most EMV-enabled POS equipment will include contactless technology, allowing merchants to accept contactless and mobile payments. This will provide a higher level of convenience for customers and will speed up the check-out time. In addition to faster transactions, some of the new smart chip-enabled POS devices will also help drive loyalty and repeat business by pushing offers out to mobile phones and redeeming the offers through the devices themselves. Moreover, customers will appreciate the higher level of security and feel more confident about using their cards with the merchant. While smart cards won’t solve every security problem, they will go a long way toward boosting customer confidence at the POS.
EpicPay offers next gen solutions. Click here to view our EMV ready terminals.

When will liability shift to the merchant?
Liability will shift starting to the merchants in October 2015. Today financial institutions bear the brunt of the liability for fraud, but a new policy likely will assign liability to acquirers in certain instances. Merchants will want to get a full understanding of when and how liability will shift to their acquirer/processor and ultimately to them.