What is EMV Chip Technology?

Every year merchant accounts in the United States take a significant hit due to chargebacks and credit card fraud. Major card issuers Europay, MasterCard and Visa have reached a global agreement to improve security in credit card processing. They have agreed to switch to a new chip-embedded credit card for use at point of sale. The EMV credit card is designed to prevent fraud in credit card use.

What is an EMV Chip?

The EMV (named for the major issuers) credit card uses an integrated circuit or microchip. This new technology makes it impossible to copy as the information is constantly being updated reducing the number of fraudulent transactions. The card uses cryptography to authenticate the card, the card issuer and user data stored on the card. The chip enabled cards which have been in use in Europe for decades have driven down face to face credit card fraud.

Benefits of EMV cards

EMV cards have security features that allow transactions to be approved or declined at the terminal as well as being called in. This saves time and speeds credit card processing transactions for merchants. This technology is ideal for busy areas with multiple small transactions like kiosks, vending machines, and fast food restaurants.
EMV cards can store information, process transactions and protect a customer’s data through stored encryption. Therefore card authencity can verified at every transaction cutting down chances of fraudulent use and chargebacks to merchant accounts.

Difference between Magnetic Stripe and EMV Cards

Standard magnetic stripe cards rely on signature identification and visual inspection to validate a card. The information on the stripe is static, therefore when it is skimmed by counterfeiters, it can be copied onto a new card. These cards have been the standard for credit card processing for years. They are cheap to produce and replace. For example, a magnetic stripe card costs about twenty cents versus $10 for EMV cards.

Each EMV card is individualized for each user with varying levels of memory and security features. Therefore, the EMV contains dynamic information versus static information in traditional cards. This makes copying nearly impossible.

Future of Credit Card Processing

Today’s merchant accounts have to accommodate the every changing landscape of new ways to pay including tap and go, swipe and sign, and smartphone wallets. Retailers who want to take advantage of expanding markets need to research and budget for new technology in credit card processing.

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