A Primer on EMV Technology and Its Impact on Consumers
(This is a first in a series on EMV technology, which is designed to thwart credit and debit card fraud.)
EMV technology – you may have heard of it, especially in light of major data breaches involving retailers such as Target, Michaels, and Sally Beauty. But just what does EMV have to do with these crimes? And what impact is it going to have on consumers?
Simply put, EMV is intended to thwart such breaches and other counterfeit card fraud by using chip card technology. EMV – which stands for Europay, MasterCard and Visa – is a global standard for credit and debit cards. These cards are embedded with computer chips and tethered to technology used to authenticate chip-card transactions.
Cards with magnetic stripes contain data that doesn’t change from one transaction to another. That makes these cards easy targets for crooks, who use stolen card data to create counterfeit cards.
Each time an EMV card is used for payment, the card’s chip creates a unique transaction code that cannot be used again. So if a thief creates a fake card based on stolen transaction information, the card will be denied because the information will be outdated
Cards equipped with computer chips are intended to replace cards with magnetic stripes on the back of them. Unlike magnetic stripe transactions, which process unchanging data (card number and the card’s expiration date), each chip card transaction exchanges dozens of pieces of information between the card, the checkout terminal and the acquiring bank or processor host.
Although EMV technology is starting to deploy across the United States, it’s been active in Europe for quite some time. For financial institutions and merchants, the switchover in the U.S. requires adding new in-store technology and internal processing systems, and complying with new liability rules. It also means issuing millions of new cards to consumers, who will need to activate the cards and learn a new process for making payments.
According to Smart Card Alliance, a not-for-profit, multi-industry association working to stimulate the understanding, adoption, use, and widespread application of smart card technology – approximately 120 million U.S. consumers have already received an EMV chip card, and that number is projected to reach almost 600 million by the end of this year. How do you know if you have an EMV chip card? Look for a small, metallic square on it. That’s the computer chip that’s been embedded in the card.
How do you know if you already have an EMV chip card? Look for a small, metallic square on the front of your card, like the one shown in the picture above, featuring a computer chip that’s been embedded into the card. You may have already heard some of the names being used for cards with EMV technology such as the “smart card”, “chip card”, “smart-chip card”, “chip-and-choice card” and/or “EMV smart card.” You may have already heard some of the names being used for cards with EMV technology, such as the “smart card”, “chip card”, “smart-chip card”, “chip-and-choice card” and “EMV smart card.”
Experts point out that EMV technology will not totally prevent data breaches and fraud from occurring, but it will make it harder for criminals to benefit from stolen card information.
Up next: EMV Card – How do I use it and what happens when I do?