What is EMV?

Jeff Miles, VP / Information Services Manager, Scott Valley Bank by Jeff Miles, VP / Information Services Manager, Scott Valley Bank

From Wikipedia: EMV stands for Europay, Mastercard, and VISA, a global standard for inter-operation of integrated circuit cards (IC cards or "chip cards") and IC card capable point of sale (POS) terminals and automated teller machines (ATMs), for authenticating credit and debit card transactions.

Here's my take on the Wikipedia definition:

Essentially, this refers to a chip that is embedded on a credit or debit card that enhances security during the authorization process when a purchase is made at a POS terminal or when a withdrawal is made at an ATM. The difference to the cardholder is that the card will be “Dipped” instead of “Swiped” at the terminal.  You may also have to enter a PIN code when you dip your card depending on whether the card issuer chooses “Chip and PIN” or “Chip and Signature” technology.

EMC TechnologyWhy am I talking about EMV cards?

EMV technology is not new and has been used in Europe and elsewhere for many years. I believe it will make its way to the United States in the near future for a number of reasons.  First, a number of large scale data breaches have been in the news. You may recall a large scale breach at Target where 40 Million cards were compromised.  There have been many other breaches this past year and the card issuers are perpetually battling the fraud and reissuing new card stock to cardholders. Second, VISA has announced that a shift of liability will occur in October 2015 that will hold the non-EMV compliant party liable for any fraud. Currently the card issuers are typically responsible for any fraudulent transactions that occur on a card as long as the card was present when the transaction was performed, whether it is a counterfeit card or not. The new rules will encourage card issuers to issue EMV capable cards and for merchants to accept EMV cards to protect themselves from the liability of fraudulent charges.

We will go through a period where both card types exist. EMV chip cards still have magnetic strips on them that work in the event that a merchant does not have an EMV capable terminal. If the terminal has both EMV and magnetic strip readers it will ask you to dip your card if you try to swipe it in the magnetic reader so that it steers the transaction to the safer technology.

EMV technology is not going to prevent all fraudulent transactions but it should reduce the overall fraud in the card payments industry or at least challenge the fraudsters to come up with new methods. The rules are still set up to protect the cardholder from fraud and the hope is that the new technology will prevent or slow down the massive card breaches that lead to fraud and the inconvenience of having to get a new card from your card issuer every time a breach occurs where you used your card.

View Scott Valley Bank - The VAULT - October 2014