EMV chip card technology isn’t a new concept, but it is new to the United States. EMV cards have been used globally for more than 20 years, but they didn’t begin circulating in the U.S. until 2010. By the end of 2015, an estimated 40 percent of debit cards and 70 percent of credit cards issued in the U.S. could be EMV cards1— and that means credit card terminals will need to change, too.
Will your business be ready? Learn more about this new payment card and how it works.
What is EMV?
The EMV card was named after its developers — Europay, MasterCard, and Visa. It is much like a traditional card but with enhanced security, which is why more than 80 countries2 have adopted it. EMV cards are embedded with a microprocessor chip, which stores and protects cardholder data. Each time the card is used, the chip creates a unique transaction code that cannot be used again.
How do you use it?
EMV cards are read in a slightly different way than cards with a magnetic stripe. Depending on the card, consumers use one of these two methods:
- Inserting: Similar to using an ATM, customers will insert their cards into the machine until the transaction is completed.
- Tapping or Waving: Near Field Communication (NFC) card reading allows the customer to simply tap or wave the card near the reader.
Because the transition to EMV is anticipated to be a gradual one, most issuers are sending out new cards that contain both a chip and a magnetic stripe. Chip processing is preferred because it is more secure, but the swipe method can be used as a backup if the chip or chip reader isn’t functioning. As the transition to EMV nears, you may want to consider a terminal that can process insert and tap-and-go payments.
Similar to traditional payment cards, most transactions will require either a signature or PIN number to verify the payment. For now, most card issuers will offer chip-and-signature cards, as many processors are not yet equipped for the chip-and-PIN cards.
When will the transition happen?
Card associations have set a compliance deadline for October 1, 2015. This doesn’t mean you must have EMV-compatible terminals by October. After the deadline, however, if your business doesn’t have EMV terminals you may be liable for fraudulent charges should they occur.