What is EMV and What Does it Mean for Consumers?

Published On October 1, 2015 | Tech Business

Credit card fraud is a growing concern, especially in the United States where close to half of all credit card fraud is committed. Massive data breaches are also a threat to consumers and their wallets. In response, U.S. banks are taking action with Europay, MasterCard, and Visa (EMV) credit cards. EMV credit cards are the latest in fraud protection.

EMV credit cards, also called smart-chip or smart cards, offer increased security with the use of a small computer chip instead of the traditional, easily counterfeited, magnetic strip. This chip creates a unique transaction code when the credit card is inserted, or “dipped,” into a point of sale (POS) terminal. Gone are the days of swiping—unless a business has not switched over to a system which reads EMV.

When the Changes Take Effect?

As of October 1, 2015, many banks have stipulated that businesses, particularly those who have not updated their systems to read EMV chips, may be held liable for fraudulent activity if a consumer’s card is swiped without authorization. The hope is this will protect consumers, and the banks, from businesses accepting counterfeit credit cards.

What Does it Mean for Consumers?

So with this new type of credit card, you may be wondering how this will affect your next shopping trip. The good news is, not much. Instead of swiping and entering a PIN code, you’ll simply dip and sign. If you swipe an EMV card in an EMV-enabled POS terminal, the terminal will beep or alert you to insert your card instead. The card stays inserted until the transaction is completed. Unfortunately, this may lead to increased check-out times and longer lines as consumers will have to wait until the transaction is finished before removing the card.

Instead of entering a PIN to authorize the EMV card transaction, a signature will be required. The downside to using signatures instead of a PIN is if an EMV card is stolen, the card can be used wherever EMV cards are read. All the thief has to do to complete a transaction is forge a signature. However, this is only a concern if the actual EMV card is stolen since the computer chip makes counterfeiting these credit cards nearly impossible.

Of greater concern when it comes to credit card fraud are data breaches and stolen card data. This is where EMV cards will most benefit consumers. EMV cards use a new, unique code for each transaction, unlike magnetic stripe cards, which use the same data at each transaction. An unchanging magnetic stripe is easy for thieves to replicate and charge away. Because EMV chips generate a new code at each transaction, would-be thieves are unable to use any prior transaction codes, helping to reduce fraudulent credit card activity.

EMV cards offer increased protection from fraud and data breaches for physical, in-store purchases. However, a stolen credit card number on an EMV card can still be used for Internet purchases.

Although EMV credit cards won’t stop all credit card fraud, it will certainly make it harder for bad guys to access your information.

– By Jennifer Thayer



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