What You Need to Know About EMVs
May 15, 2017
Are you a swiper or a dipper? Chances are, you have at least one EMV chip-enabled card in your wallet.
EMV, which stands for Europay, Mastercard and Visa, was introduced in the U.S. about 18 months ago. The cards are also called smart cards, chip cards and smart-chip cards.
Here’s what you need to know about the new generation of cards.
Increased protection against fraud
The main reason behind the switch is to curb rampant credit card fraud in the U.S. Experts pin the high rate of fraud on the outdated magnetic-strip system the country had been using. Magnetic strips store static, unchanging data. Whoever gets their hands on that data can then do anything with it.
In contrast, EMV cards create a unique transaction code for each purchase you make. That code cannot be reused, so even if a fraudster steals the chip information from a transaction, they won’t be able to use it for another purchase.
How it works
Like their counterparts, chip cards are processed through card-reading and verification. However, instead of a quick swipe, you’ll be asked to insert, or dip, your card into a terminal slot and leave it there as the transaction is processed.
When your card is dipped, data is transmitted from the card chip and the issuing financial institution to verify the card’s legitimacy and create the unique transaction code. This process takes longer than a swipe.
After you’ve inserted your card, you may be asked for a PIN or a signature which will be transmitted to the payment terminal for verification. If your merchant doesn’t have a chip-card reader, your EMV card can be read with a swipe. Also, if you’re unsure of whether to dip or swipe, the terminal will guide you.
Fraud liability changes
The shift to EMVs presents several changes for merchants and financial institutions. Issuing new cards and purchasing new processing technology is an expensive undertaking. But there’s more than just cost involved – the switch brings new liability rules.
Also, chip-card fraud is difficult, but still possible. In the event that an EMV card is frauded, who is held responsible? Since Oct. 1, 2015, the liability for card fraud has shifted to whichever party is the least EMV-compliant in the transaction. If the merchant isn’t equipped with chip-card reading equipment, they will be held responsible; if the consumer’s financial institution has not provided them with an EMV card, they foot the bill.
Increase in online fraud
The EMV transition has spiked online fraud. Chip cards or magnetic stripe, for online purchases, has no difference. When buying something online, it’s your responsibility to take security measures.
Never give personal information by email or authorize a wireless money transfer for a merchant if you are not familiar with them. Also, if possible, choose tokenized systems like ApplePay.
Your Turn: Has your credit card ever been frauded? What did you learn from the experience? Share your wisdom with us in the comments!