Since its introduction to the United States in 2011, EMV® has improved credit card security, reduced fraud, and allowed customers to use their cards abroad with greater convenience and confidence.
The Basics of EMV®
EMV (Europay, Mastercard, Visa) chip card transactions improve protection against fraud when compared to traditional magnetic stripe credit cards. EMV can be used for credit and debit card transactions and most recently, NFC mobile payments. Unlike its predecessors, EMV-enabled cards use a smart chip, instead of a magnetic stripe, to hold the data required to complete a purchase.
To reduce fraud, the U.S. began to migrate to EMV in 2011 to meet the liability shift deadline of October 2015. As of 2017, more than 855 million chip cards have been issued to U.S. consumers.1
How EMV Technology Works
An EMV chip’s ability to store more information than a magnetic stripe means that EMV-enabled cards can hold encrypted data, which helps protect against fraudulent use. Unlike magnetic-stripe cards, every time an EMV card is used for payment, the card’s chip creates a unique transaction code that cannot be used again. And so, now cardholders must “dip” their card into the reader. Additionally, EMV is widely accepted abroad, making purchasing much easier for cardholders while traveling.
Even with these advanced security features, counterfeit fraud is still a risk. In an effort to facilitate the adoption of EMV technology, fraud liability rules were altered back in 2015 by U.S. credit card issuers Mastercard, Visa, Discover, and American Express. After October 1, 2015, liability for in-store counterfeit fraud shifted to either the card issuer or the merchant that has yet to adopt chip technology. This can prove to be very expensive for a business that is not prepared to accept EMV-enabled credit cards.
Since the adoption of EMV technology, fraud has significantly dropped. For merchants who have completed the chip upgrade, counterfeit fraud dropped 80% in September 2018 as compared to September 2015.2
In April 2018, the four major U.S. credit card issuers (Visa, Mastercard, American Express, and Discover) decided they will no longer require signatures as verification for purchases.3 Retailers may still require signatures to verify a cardholder’s identity but, it will be at their discretion. This will ultimately help to streamline the checkout process without compromising credit card security as signatures are not considered a reliable security measure and cashiers rarely check the signature on the back of a credit card.
Solutions That Tie to EMV
EMV payment options come in a variety of forms:
- Contact EMV cards
- Contactless EMV cards
- Mobile EMV
- Wearable EMV