EMV is the newest technology to hit the payments landscape. Use this guide to help you understand the top 5 things you need to know TODAY about EMV and how it will affect your business.
“The payment industry has been shaken to its core by the onslaught of recent security breaches. Though unfortunate, the Target breach was a wakeup call for everyone in the payments space to stop, take notice, and take action. Tighter security measures in-store with EMV, combined with more complex measures online with two-factor authentication, are just the beginning. We at Direct Connect are investing heavily in the right people and the right technology to help our merchants not only be prepared for EMV day next year, but to take on new challenges and new security needs in the future.”
President of Direct Connect
There has been a lot of talk about better credit card security going around the net – especially surrounding the breaches that occurred at Target and a few other big box stores. EMV, PCI, CPP and a whole litany of acronyms and new terms are coming out now outlining more secure ways to take payments and other regulations for merchants, banks and acquirers to follow. There is so much to understand about all of this, but here are the top 5 things every merchant needs to know about EMV:
1. WHAT IS EMV AGAIN?
The smart card – as it is used today – has been around since the 80s. However the creation of the ICC or integrated circuit card – dates back to 2 German engineers creating it in the late 60s. It wasn’t until around 1994 when several companies got together, wanting a more secure standard for credit card processing. These companies, Europay, MasterCard and Visa came together and create the EMV standard. Since then other companies like Discover, American Express and UnionPay have joined to further chip based payment acceptance worldwide.
2. EMV DAY IS COMING! AND IT’S COMING SOON!
In October of next year merchants will be faced with a stark reality. You see up until now Banks and Credit Card issuers have been footing the bill for a majority of the cost related to everyday fraud with credit cards. To mitigate this fraud, Visa, MC and others have mandated that by October 1, 2015, merchants should be able to take EMV transactions at their point-of-sale. And to incentivize this, there’s this thing called Liability shift that Merchants will need to worry about as well. If they take a non-EMV based transaction (that is EMV card + EMV terminal) then they will own 100% of the liability if that transaction is found to be fraudulent.
3. IT WORKS BRILLIANTLY, JUST ASK THE REST OF THE WORLD!
EMV cards have been in use for quite some time. In respect the other major countries in the world, the US is last on the list to implement EMV. What does this mean? Just ask Joshua Brustein of Businessweek.com. He states that the US, “accounted for 47 percent of global fraud, while processing just 24 percent of the payments [volume]”. Fraudsters and the like are focusing on the US because of the lax in our credit card security.
4. IT’S ALL IN THE CHIP
Now, I know you might be asking yourself, ‘okay so it seems secure, but why?’ It’s all in the chip. The actual smart card in an EMV card is a micro-processor. In the chip there is information about the chip manufacturer, the bank it’s connected to, the card holder, and bits of other data. On chip ready terminals, similar information resides on their cards as well. When the two come together, either by contact or contact less, they combine their data together to create a very unique message that is then sent to the bank for approval. When this message goes to the bank it’s not just asking if there is enough money in there, it’s validating the terminal information, the card information, the date in the message as well as whether or not there is enough money for the transaction to complete. It’s a lot more information but it’s still being communicated instantly as it is today.
Because of this enhanced information it creates a unique message. This is what fraudsters find difficult to hack. It’s more than just hacking in a terminal, sniffing out track 1 and 2 information. Since it’s a handshake and a combination of data points, the strength behind EMV is exponential in comparison.
5. SECURITY COMES IN MULTIPLE FORMS
The smart chip in EMV cards is more than just a physical chip. EMV can be sent as a contact less communication or with NFC or Near-Field-Communication. You might have heard of this term as most Android phones have this technology in place for sending photos and other information between users.
First the contact less communication is actually low-frequency radio waves. They’re on a spectrum that can only be read my other smart chip cards or incredibly sophisticated equipment. And the card will have to be within less than a quarter inch away from the reader. That’s no taller than a stack of 3-4 pennies. Once they come in proximity of the other they communicate the information just as a contact chip would.
NFC is a similar model. NFC is certified to send EMV based information and is most likely going to be the tool of choice to get EMV use in the hands of customers. 91% of adults own a smartphone. The best way to move a technology forward is to make sure people have the ability to use it! And it’s in their hands already!
To find an example of the success that EMV brings, just look to the North. David Heun, of Paymentssource.com, comments on the impact EMV had in Canada:
“(Fraud in Canada)dropped to 72,200 in 2013, compared to 238,000 in 2009”. He continues saying that, “fraud, through card skimming, dropped to $29.5 million (in 2013), well below its high of $142 million in 2009.”
These numbers are similar in the UK, France, Australia and other parts of the world that have already implemented EMV technology.
Associate Editor at PaymentsSource.com
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