You probably haven’t given much thought to the small computer chip that may be implanted in your credit or debit card. This chip, and the terminal and hardware that can read it are part of the new EMV standard that allows you to use the card to pay for purchases in more secure and efficient ways than the magstripe standard before it.
EMV was developed and introduced by Europay, Mastercard, and Visa to enhance the security of credit and debit card payments. The security standard that is used for EMV payments is separate from the security standard used for magstripe cards and is exclusive to the payments industry.
The security standards that are included with the EMV chip help to protect everyone who is involved in the transaction, including the cardholders, merchants, issuers, and processors. When EMV cards were first introduced, they had a significant impact on payments fraud because the unique transaction ID’s can’t be replicated, making it more difficult for fraudsters to replicate the EMV enabled cards compared to traditional magstripe cards.
You are only able to complete EMV transactions for in-person transactions where the cardholder physically has an EMV enabled payment card with them, and when your terminal is enabled to accept EMV payments.
Transactions with EMV cards are commonly referred to as “Chip and Dip” or “Chip and Pin” because the cardholder is required to insert their card into the terminal and enter their pin to successfully process a transaction.
After the introduction of EMV enabled cards, there was a liability shift to the merchants making them responsible for fraud if they do not process a chip card with an EMV enabled terminal. This provided an incentive to merchants to upgrade to EMV enabled terminals, which most merchants have now done. This is one example of why it is important to keep up with the changing standards and technology available to those involved in the payment processing industry.