EMV refers to a type of transaction that uses credit cards with embedded chips.
EMV cards are used in both chip and PIN and chip and signature transactions. With both transaction types, the customer inserts their card into a reader.
Contactless chip cards also use EMV technology. With this payment method, customers tap the card to the terminal rather than inserting it. Some terminals let merchants accept both EMV and NFC payments. NFC, or near-field communication, is what powers mobile payments such as Apple Pay and Google Pay.
Transactions that use a chip are more secure than those that use a magnetic stripe. The data in a magnetic stripe is static, so if it’s stolen, it can be used for future purchases. The data a chip transmits is dynamic, which means it changes between each transaction. If someone intercepts the information from a transaction, it can’t be reused.
The initials EMV stand for Europay, Mastercard, and Visa. These are the three companies that first agreed to the global chip processing standards in 2002. Today, EMV standards are managed by EMVCo.
EMV technology became the standard in Europe several years before it was adopted in the U.S. In 2015, the major credit card brands began requiring merchants to accept EMV cards. There was a liability shift for businesses that didn’t upgrade their equipment. The shift meant that merchants who couldn’t accept EMV cards would be liable for certain chargebacks.
Merchants in some industries had longer to switch to EMV. Gas stations are one example. They were given leeway due to the expense involved in replacing the card readers at their gas pumps.
In 2020, almost 73% of card-present transactions in the U.S. were EMV. Worldwide, 86.1% of transactions were EMV.
Any time you insert your credit card in a terminal, you’re using your card’s EMV chip. The chip contains information about your account, similar to a magnetic stripe. However, the chip’s encryption is more secure. The encryption process is also why EMV transactions take slightly longer.
For many transactions in the U.S., inserting your card is all you need to do to complete a transaction. Occasionally, you might need to provide a signature or enter a PIN. In other locations, including Europe and Canada, you would be more likely to enter your PIN for most purchases.
Some chip cards have contactless capabilities. If you’re unsure if yours does, look for a symbol with curved lines, similar to a WiFi symbol. With this feature, you can tap the card to the terminal when you’re ready to pay. Keep an eye out for the message on the device’s screen saying “swipe, tap or insert card.”
If you own a retail business, you might already have EMV-capable equipment so that you can accept customers’ chip cards. If you haven’t made the switch, talk to your processor about your options. While upgrading your equipment is expensive, it will protect you from chargeback liability.
In some situations, a card’s chip can’t be read, meaning you have to swipe the card instead. This type of transaction, referred to as a fallback, is an occasional part of doing business. If it happens too often, you’re at an increased risk of chargebacks and fees.« Back to Glossary Index
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