NFC and EMV both refer to relatively new payment card technology that has changed the landscape of accepting credit and debit cards.
This technology fundamentally changes how a cardholder is able to use their cards to pay for a transaction in person and how the card communicates with the terminal to process the transaction.
What is EMV?
Cards that use EMV technology, or "chip cards," have a small computer chip implanted on the card that communicates with the terminals to ensure you are not a fraudster. With the recent liability shift in 2015, merchants can now be responsible for some types of fraud if they do not process a chip card with an EMV enabled processing device. These types of transactions are commonly referred to as “Chip & Pin” or “Chip & Signature” because cardholders are required to insert the chip on the card into the terminal, and then enter their pin or sign the receipt to complete the transaction. Europay, Visa and Mastercard were the companies who came up with the EMV technology which is also what the abbreviation stands for. EMV cards, which are much more secure, are steadily overtaking magstripe cards as the new worldwide standard.
What is NFC?
If a card is equipped with NFC, or Near Field Communication technology, then they are able to pay for a purchase by simply holding their card close to the terminal, essentially facilitating contactless payments. NFC payments are also commonly referred to as "Tap & Pay" because the user can simply “tap” their card to complete the transaction. Mobile and wearable payment technology, such as Apple Pay and Android Pay, also rely on NFC technology to complete transactions.
Are the Transactions Secure?
EMV was introduced to add additional security when processing payments to protect both the merchants and the cardholders and limit their exposure to fraud. When EMV was introduced around the world, it had a significant impact on card-present fraud. Each time you process an EMV transaction, the payment creates a unique transaction ID that cannot be replicated, and the cards themselves are also more difficult for fraudsters to replicate compared to magnetic stripe cards.
If a customer makes a purchase using NFC technology, then both Visa and Mastercard require the customer to hold their card (or device) close to the card reader for the transaction to be processed. Each NFC transaction also includes a unique security code to help protect against fraud. Unlike Chip and Pin or EMV transactions, many NFC transactions have a limit of about $100, and if the transaction amount is above that amount, then customers will need to insert their card into the terminal for the transaction to go through.
How do you Accept EMV and NFC Payments?
Many of the newer terminals can accept both Tap & Pay as well as Chip & Pin payments from consumers. As a business owner, you’ll most likely find that many of your customers have credit and debit cards, along with their mobile wallet options, that they want to use to pay for a purchase. As a retailer, you can also be liable for consumer fraud if you have not upgraded your terminals to be able to accept EMV payments and you process a fraudulent transaction using an EMV enabled card.
The distribution of EMV and NFC cards will continue to increase in the next few years as issuing banks phase out magnetic stripe cards and issue more EMV and NFC enabled cards. It’s important that you are aware of these new payment technologies and how they affect your business and the way you accept payments.