EMV Chip

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EMV Chip

The EMV chip, or just the chip, is the latest step in credit card fraud protection. It has taken the CVV2 a step further.

EMV stands for Europay, Mastercard, Visa. It works by creating a unique code for each transaction. It is like having a different CVV2 code every time the card is inserted.

Every time the credit card is inserted into a point of sale (POS) machine the card interfaces with the processing company to validate the card. When a card is swiped it sends the information without real-time validation.

The process may take a few seconds longer than the traditional swipe, but it is much more secure. Using a chip reduces the risk of the card information being lifted by a digital thief.

Because the chip offers a complete operating system with a microprocessor written onto the chip itself, the information is almost impossible to clone or card skim.

As of 2020, there are almost 11 billion chip-bearing credit cards around the world. While this security measure is not foolproof, it greatly decreases the possibility of fraud.

To ensure this security, the chip will even function if the POS is offline. Even in offline mode the card can interface with the system and validate the card.

The success is written in the statistics. According to Visa, the use of the EMV chip has reduced fraud by 76%. Reports state that fraud in France and the UK dropped to nearly zero with a combination of chip and pin transactions.

The numbers in the US have not been that drastic, but according to the Federal Reserve the numbers dropped from $3.6 billion to $1.9 billion in a single year.

Another positive aspect of the chip is the ease of use. The newest step is the contactless purchase. The chip can now interface with the POS with a simple tap.

Studies have shown that the simplicity of a quick tap purchase has streamlined the shopping scenario further, thereby increasing profitability for merchants around the globe.

It must be understood that the use of the chip does not fully eliminate fraud. There are still merchants that require a swipe, which reduces the security level offered by the chip.

Online purchases are also a security weakness, depending on the site’s security. The chip cannot protect against the manual input of a credit card number. However, the CVV2 and online security protocols help to maintain protection for consumers.

As technology increases, systems like the EMV chip will adapt and increase their ability to protect credit cardholders around the world.

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