Europay, MasterCard and Visa (the original developers) or EMV is a new worldwide standard aiming to stomp out card present fraud by using microprocessor chips to store and protect cardholder data. New “Chip Cards” are currently being issued and nearly every bank card in America will be an EMV card by the end of 2015. This follows the model set by Europe which has almost completely phased out older traditional or non-EMV cards.
EMV cards will not completely prevent all non-face to face or card not present fraud, but the EMV card is designed to make transactions involving swiped transactions more secure. Numerous data breaches over the past decade have been proof that it is not difficult for thieves to “Skim” and load cardholder information onto blank cards. EMV was designed to put an end to this. The security of a “Chip Card” differs from a traditional magnetic stripe card in the manner in which data is transmitted from the card to the point of sale terminal. A magnetic stripe card contains “Static” data which does not change from one transaction to another. In other words, you could eat dinner and have the waiter “Skim” your card, capture your cardholder information then load it onto another card without your knowledge. With an EMV chip card, the data is constantly changing from one transaction to the next otherwise called “Dynamic” data. The EMV data that is transferred from the chip contains a unique transaction code that is not repeated between transactions. If a thief were to copy cardholder information it would never work since there is a new code (transaction number) created for each transaction.
October 2015 is a soft deadline for merchants and cardholders, but it is highly recommended for consumers and merchants to abide by this date to prevent fraud. Merchants will want to use the new EMV technology since fraud liability will begin shifting from the customer to the merchant in late 2015. Being EMV enabled is a long term cost saving measure and will prevent the hassle of headaches if there are any data breaches. In addition to being the industry standard, equipment is less expensive than regular card terminals were years ago – making it affordable to be in compliance. Merchants are able to purchase one online for under $200, but it is suggested merchants try contacting their processor first to see if there were any incentives or deals available.
EMV is truly an amazing piece of technology. Over the past few years, Europe alone has seen a huge decrease in fraud while the United States has seen an increase in face to face card fraud. This is mainly due to the fact we are one of the last countries to adopt this new technology. Although EMV will not prevent data breaches, it will help prevent card present fraud, making the data worthless in these situations. We just now need an EMV type system for online and phone purchases.