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EMV 101: What You Need to Know Now

U.S. consumers are beginning the migration from traditional mag-stripe credit and debit cards to EMV-based chip cards. Here’s what you need to know now.

What it is:
EMV stands for Europay, MasterCard and Visa, the global standard for cards equipped with computer chips and the technology used to authenticate chip card transactions. EMV encompasses requirements that ensure interoperability between POS terminals and chip-based payment cards containing embedded microprocessors. Chip cards are intended to provide strong transaction security features and other application capabilities not possible with traditional mag-stripe cards. Read more about what EMV isn’t, here.

When it’s happening:
In the U.S., October 1, 2015 is the point at which liability for fraudulent transactions using counterfeit or stolen credit and debit cards at the point of sale (other than gas pumps) is shifting from issuers to merchants, unless those merchants have migrated to acceptance solutions that accommodate EMV chip cards.

Who should care:
All merchants are potentially impacted. While there are no legal requirements or penalties for not migrating to EMV-capable terminals, the liability shift could be painful, if not disastrous, particularly for small businesses and those with tight profit margins. Merchants may also be able to take advantage of compliance incentives offered by the major card brands.

Why it’s happening:
The major card processors have all settled on EMV as a more secure card technology and the U.S. government has mandated that payment cards – both credit and debit – issued by Federal agencies, must support the EMV protocol. Unlike mag-stripe cards, EMV chip cards cannot be duplicated and utilized to complete fraudulent transactions. This will make it harder – if not impossible – to use a counterfeit EMV card at an EMV-accepting payment terminal. Our CSO, Joe Majka, recently talked with about why EMV is still not a cure-all for payment security.

Where it’s happening:
This impacts all U.S. merchants with physical point of sale locations. But EMV is a global standard that has previously been adopted by virtually all developed countries, including Canada.

How it works:
These cards must have been validated either online by the issuer using a dynamic cryptogram or offline with a terminal. EMV transactions also create unique transaction data, so that any captured data cannot be used to execute new transactions.