WHAT IS EMV?
EMV started as Europay, MasterCard, and Visa. It is now managed by a consortium called EMVCo. Apart from the three companies mentioned above, the other companies with an equal share in the consortium are American Express, JCB, Discover and China UnionPay. It is a secure payment technology standard used globally in debit and credit cards.
EMV chips provide a secure transaction to all the parties involved— the cardholders, merchants, and issuers. They have substantially impacted fraudulent activities as their unique transaction IDs cannot be replicated, making them safer to use than the traditional magstripe cards.
For an EMV transaction to be complete:
- The cardholder should physically have an EMV enabled card with them.
- The terminal should be enabled to accept EMV payments.
HOW DOES EMV WORK?
The EMV process is simple to understand on the customer’s end. Instead of swiping the magnetic stripe of a credit card, the customer dips one end of the card into the EMV reader so that it can scan the chip. For EMV technology to work, the point-of-sale (POS) system where the card is used must be equipped to read and communicate with the microchip. During every transaction, a unique code is created by the microchip. This code cannot be used again.
This type of EMV payment processing is very different from the traditional magnetic stripe card payment processing. Data can be easily copied on the magnetic stripe cards by any card-reading device and reproduced in forged cards. That makes EMV a better option. Almost 83.1% of transactions made globally are by EMV chip cards.
UNDERSTANDING EMV
- EMV CHIP
A smart chip is like a small computer. Its primary function is to provide security. There is also a secret vault present in the chip that carries unique keys specific to each card.
- UNIQUE CODE
EMV cards generate a specific code. The bank validates this code for every transaction which cannot be reused. This code makes it impossible for a fraudster to use a fake card with stolen data at an EMV terminal. This is because the fraudster wouldn’t be able to generate the proper code.
- ADVANCED CRYPTOGRAPHY
EMV technology uses advanced cryptography to create unique codes. Private key infrastructure is used in cryptography. This means, for a valid transaction, the chip card will have to be personalised with a private key.
BENEFITS OF EMV
- LARGER CAPACITY
The first benefit of EMV cards is that, compared to magnetic stripe cards, EMV cards have more storage capacity. This allows additional information to be recorded too. We can also modify the content of the card by executing various scripts.
- POINT TO POINT ENCRYPTION
Through point to point encryption, businesses can encrypt data whenever an EMV card transaction occurs, making it secure.
- INTERACTIVE MINI-APPLICATION
As the space available on the chip is very large, an interactive mini-application is recorded in it. The mini-application is capable of customising the user experience. When a card is inserted into a terminal, the terminal reviews all available applications and interacts with the most fitting one.
- PROTECTION AGAINST FRAUD
The point to point encryption technology protects users against fraudsters. When using a magnetic stripe card, the card’s data goes to a POS application (intermediary application) before reaching the payment gateway. EMV tries to eliminate the intermediary application so that the data goes straight to the payment gateway.
- IMPROVES CUSTOMER RELATIONS
Now we know that EMV uses point to point encryption and provides protection against fraud. Customers also develop a sense of trust and feel that their security is taken seriously by the business if it uses EMV technology.
EMV AND E-COMMERCE
EMV is not directly correlated to gateway payment online options for e-commerce stores. Its main job is to secure point-of-sale or card-present transactions, so it is primarily used for in-store payments. However, card-not-present payments are continuing to grow, and the market value of e-commerce is rapidly maturing. So, EMV technology may make it possible to launch several new and improved online security measures for e-commerce businesses.
Businesses do not need to be EMV compliant, but they should be using this technology as in case of fraudulent transactions, the loss’s liability is much less likely to fall on the merchant.
