EMV Cards are credit or debit cards that contain an embedded microchip and is tailored with technologies specifically designed to enable safe and secure payments at the designated point of sale or PoS. The compatible terminals containing the EMV chip enable card dipping for payments to be executed after the authentication is successfully completed via a PIN or a signature.
Today, EMV cards can also support contactless payments through wireless communication channels. Upon inserting the card into the machine or simply tapping the EMV card onto a reader, a single-use transaction code or an OTP number is issued for authentication and secure transfers.
In this blog, we explore how these EMV cards work and why they are so important in the payment ecosystem.
EMV is an acronym for ‘Europay, Mastercard, and Visa,’ the three companies that created the standards of embedded chip cards. The EMV chip card is a payment method based on the EMV technical standards to enable cashless transactions on automated teller machines and payment terminals using smart payment cards.
The EMV security chip is a security chip that is extremely difficult to clone. The difficulty in cloning allows it to make safe and secure transactions easily without worrying about theft and fraud. Banks and merchants are incentivized to make transactions more secure and seamless as failure to do so in case of fraudulent transactions can lead them to being penalised heavily.
EMV cards are the new mode of making quick and efficient payments. Most new EMV cards use near-field communication (NFC) technology that allows contactless payments. The transition is largely supported by the security it guarantees, even in a wireless medium.
Chip cards based on the EMV technology have enhanced safety features solely designed to prevent fraudulent transactions like skimming or cloning that were easily possible using the old magnetic strip cards.
The old magnetic strip cards possess data on the rear side of the card, enabling easy access to sensitive data, thus increasing the number of malpractices. However, this security threat was mitigated with the introduction of the latest EMV cards that possess all your data on a secure microchip and can be accessed only when placed onto a reader. It means that the microchip creates new user data every time the card is used, thus making it impossible for data to be stolen.
A unique encrypted code is generated every time you swipe your credit or debit chip card that is unique only to that specific transaction. Hence, EMV technology enables cashless transactions with high security and safety.
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EMV cards are specialised embedded with chips that enable data transmission, just like how magnetic strips transmit data. It is important to note that payment terminals do not read EMV chips in the same manner as magnetic strips.
An EMV card is typically placed into the payment terminal that reads the data of the EMV chip and then verifies the card as an authentic one. The payment occurs after authorization. This process is known as “card dipping.”
Conversely, completing a purchase with the help of a card having a magnetic strip through a reader is capped as “swiping.” The strip also makes use of authorization while transmitting data for card verification. A swiped transaction often tends to be quicker than a dipped transaction. However, a swiped transaction is not as secure and safe as a dipped transaction.
Another rather popular method of using an EMV card is through a mode of contactless payment. If the card possesses the capability, tapping it or waving it on the payment terminal can allow you to complete the payment easily. Note that contactless payment methods do not require PIN authentication.
Account Security is guaranteed using the EMV chips as it uses cryptography to process transactions. Unlike magnetic strips, the EMV chip is not placed on the rear end of the card with sensitive information. It does not give any data regarding the person or sensitive account information. It uses a one-time code authentication process enabling account security and seamless transactions.
With the rise in theft and fraudulent practices, security is one of the major concerns while processing transactions. The threat of losing all personal data is rather substantial. However, the EMV chip technology helps us streamline the entire process while enabling ample security. Here are a bunch of merits and benefits of using EMV cards:
Chip-and-PIN, as well as chip-and-signature, utilize the EMV chip card. Chip-and-PIN is advantageous as it minimizes the risk of fraudsters taking advantage as you are required to authorise the payment using a unique PIN known only to you.
Another significant problem that requires consideration while choosing between the two is the liability that comes to terms while using chip-and-signature.
In case a stolen chip-and-PIN card is used at your end, and you run it as a chip-and-signature on your payment terminal, you shall be held liable as the right technology was used despite its presence.
EMV cards are also referred to as:
Like every other card, the EMV chip scam is also a threat to look out for. Perpetrators use debit or credit chip cards and install them with fake microchips. Upon using the card at a retailer, the card inserted into the reader shows an error as the chip is fake and unreadable. They then convince the salesperson by telling them about the issue with the card chip and asking them to use the magnetic strip to complete the transaction.
Thus, it allows them to complete the payment using any stolen or cloned card. However, there is another point to keep in mind. If the perpetrator owns the card or even has complete access to the account details and credentials, the issuing bank can be called to report the fraudulent transaction. It allows them to claim a refund on their lost money.
The only way for retailers to avoid such transactions is to ensure that they are strongly consistent about making POS transactions using the EMV chip only. The swipe option using the magnetic strip exposes the retailers to too much risk and liability giving them no stance to dispute any chargebacks or fines relevant to those transactions.
Also Read: Credit Card Cash Withdrawal: Should You Withdraw Cash with Credit Cards?
The encrypted cryptography used by these microchips enables efficient and smooth transactions with enhanced security and efficiency. Cashless and contactless transactions are a major plus. The popularity of EMV chip cards will only grow and magnetic strip cards are slowly becoming obsolete.
Ans: These cards make use of encrypted technology to hold your account information, unlike magnetic strip cards. Furthermore, these cards use a unique data code for every transaction making it impossible to clone.
Ans: Yes, EMV cards can be used to make payments globally. EMV cards adhere to standards that are globally set by “Europay,” “Mastercard”, and “Visa.”
Ans: Chip-and-pin credit cards have sophisticated encryption that uses a unique PIN to authorize payments thereby providing protection.
Ans: The embedded microchip in the card stores all the data and details needed to authenticate, authorise, and process transactions. It is the same type of account information that exists in the magnetic stripe.
Ans: The embedded chips on the front side of the card can be damaged by scrapes from keys, coins, and other items with sharp edges.
Ans: EMV card requires a contact when it attempts making a payment; an RFID card transmits information through radio waves using a hidden chip. Hence, they are different.
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