What is EMV Chip Technology?

By Daniel Flynn

What Is EMV Chip Technology?


Nowadays, it is rare that you will see a credit or debit card that doesn’t have a ‘chip’ on it (unless it’s in your mobile wallet of course). Because of this shift, we as consumers are now accustomed to dipping our cards rather than swiping them. At this point, you may be asking yourself what EMV means. Or how EMV chips even came to be.

The rest of this article will give you an understanding of how EMV came to be as well as the benefits of its widespread adoption.

What does EMV stand for?

EMV stands for ‘Europay Visa and Mastercard’. EMV got its name because the initiative was led by card issuers Visa and Mastercard in Europe.

Why EMV?

EMV chips offer a more secure alternative to magnetic-stripe cards. The main difference is in how card data is transmitted to the card issuer. Whereas card data can be accessed on a magnetic stripe at the time of a transaction, card data is encrypted in EMV-chip transactions.

What does EMV do?

EMV encrypts card data and generates a one-time authorization code for each transaction. In doing so, EMV accomplishes two things that were not present beforehand. Through encryption, EMV removes the possibility of cardholder information theft. In addition, EMV automates transaction authorization through the use of a one-time authorization code.

A Modern Alternative

With magnetic-stripe cards, the cardholder’s signature was the single point of verification. Therefore, there was responsibility on employees to verify a cardholder’s signature. In addition, there was the possibility of user error.

EMV offers an electronic alternative that automates the verification process with unique authorization codes. The only responsibility left to the business owner is to implement an EMV-compliant payment solution.

How EMV protects the consumer

EMV chip protects the consumer by encrypting their data, making it more difficult for criminals to steal their data. While data encryption has cut fraudulent charges by nearly 70% since 2015, criminals have found a way to work around the security initiative, cardholders, business owners, and other stakeholders still need to be vigilant when it comes to electronic payment security.

How EMV protects you

The only responsibility you have as a business owner is to offer a payment solution that processes EMV transactions. In order to be EMV compliant, you’ll need to have a credit card terminal or POS system that is chip-enabled and implement a payment solution that is capable of carrying out EMV transactions.

By being EMV compliant, you offer your customers protection & limit the possibilities of fraudulent charges, which will lead to chargebacks on your business account.

As of October 1, 2015, all card-accepting businesses in the U.S. are liable for fraudulent charges if they are not EMV compliant. 

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