10 Facts you need to know about EMV

Here are 10 Facts about EMV credit cards that you must know:

What are EMV credit cards?

• EMV credit cards use chip technology (smart chips) and can be identified by a small metallic rectangular design including a hologram.
• EMV stands for Europay, MasterCard and Visa.

What are other terms for the new card?

• Smart card
• Chip card
• Smart-chip card
• Chip-enabled smart card
• Chip-and-choice card (PIN or signature)
• EMV smart card
• EMV card

How do they work?

• EMV cards are processed for payment by reading the card and verifying the transaction, just like magnetic-stripe cards.
• The process uses “card dipping” instead of swiping. The process isn’t as quick as a swipe, so consumers need to be patient with the verification.

Is the card more secure than traditional cards?

• If someone copies a magnetic stripe, they can easily replicate that data repeatedly. When an EMV card is used for payment, the chip creates a code that is unique and only valid for that transaction.
• The EMV technology won’t prevent data breaches from happening, but it will make the stolen data much less profitable. Because EMV transactions produce data that is unique to each transaction, it’s practically useless to thieves who want to use it to make counterfeit cards.
• Credit card fraud in the U.S. has doubled in the past 7 years as criminals have steered away from countries that have already transitioned to EMV cards.
• Cards with EMV chips are also being manufactured with magnetic stripes. Therefore, your chip card data could still be vulnerable at merchants who still require swiping because their terminals are not yet equipped for EMV transactions.
• Though creating a working counterfeit copy of your card will now be difficult, thieves can still use the credit card info from the card for online purchases.

Will I still have to use a signature or PIN for card transactions?

• You will still have to use one of these verification methods, but it will depend on the method tied to your EMV card, not dependent on your card being debit or credit.
• Many payment processors are not equipped with the technology needed to handle EMV chip-and-PIN credit transactions. In the early stages, the majority will be issuing chip-and-signature cards. Estimates say that point-of-sale terminals may not be fully converted to chip-and-PIN technology for two to three years.
• If a terminal doesn’t have the ability to accept a PIN, it will default to accepting a signature. The United States is way behind everyone else on chip-and-PIN: Europe did this in 2005; Africa did it in 2006. A PIN is safer, because only you know the code.
• EMV cards can also support contactless card reading, also known as near field communication.

What are the fraud liabilities?

• The current law says that if an in-store transaction is conducted using a counterfeit, stolen or compromised card, consumer losses from that transaction fall on the payment processor or issuing bank.
• After an Oct. 1, 2015, the liability for card-present fraudwill shift to whichever party is the least EMV- compliant in a fraudulent transaction. The cost of fraud can fall on the merchant if their systems are not in compliance with the EMV changes.
• The major credit card issuers each have published detailed schedulesabout the upcoming shift in liability. The change is intended to help bring the entire payment industry on board with EMV by encouraging compliance in order to avoid liability costs. Companies that are not EMV-ready by October 2015 could face much higher costs in the event of a large data breach.
• Automated fuel dispensers will have until 2017 to make the shift to EMV. Until then, they will follow existing fraud liability rulings.
• Static card numbers can still be stolen. Many have opted to use one-time tokens that change for each use, like ApplePay and Samsung Pay.

When will the EMV technologies be updated?

• Javelin Strategy & Research reports, “By the end of 2015, it is forecasted that 166 million EMV credit cards will be in circulation in the U.S. (29% of the total), and 105 million EMV debit and  prepaid cards (17% of the total).”
• Although the upcoming deadline is powerful incentive for all payment processing parties to become EMV- compliant as soon as possible, experts do not believe everyone will comply by that date. Javelin forecasts that it will take until the end of 2018 for EMV card ubiquity to reach 96% of credit cards and 98% of debit and prepaid cards.
• Consumers with credit cards that are expiring in October will likely be in the first wave of transitions to chip cards.
• EMV debit cards may be issued at a slower pace. Debit conversion is lagging mostly due to the complex act of integrating EMV into the 16-plus regional debit networks in the United States. Other countries have national networks.
• Many newly-issued EMV cards, some already distributed, will be equipped with both chip and magnetic-stripe functions. If chip-card readers are not in place at a merchant at all, your EMV card can be read with a swipe, losing the security of the chip.
• By the end of 2015, the Payment Security Task Force (PSTF)predicts roughly 575 million payment cards (about half the cards in circulation) will have EMV chips.

Will the EMV card work outside the country?

• Many European countries moved to EMV technology years ago, making it difficult for U.S. citizens when traveling in other countries. However, it will still take some time until the U.S. completely transitions to the chip-and-PIN cards that are the standard in most other countries that support EMV technology.
• Some foreign merchants will be unwilling or unable to process cards using chip-and-signature verification methods.
• Unmanned payment kiosks in Europe used for such things as bike rentals, train ticket stations and parking permit dispensers will most likely only accept chip-and-PIN cards.

What does it mean for merchants?

• Merchants and financial institutions will have to add new in-store technology and internal processing systems to become EMV compliant.
• Beginning Oct. 1, 2015, businesses without credit card terminals designed to take advantage of EMV chip technology will be liable for fraud losses.
• Banks are spending billions to issue new cards, but they are falling behind.
• Small businesses might spend $2,000 for the upgrade and average-sized shops could be spending $25,000 to move into EMV-technology. Each new machine costs about $250, and installation might cost twice that. Employees will also need to be trained on these new payment methods.
• Big retailers are spending a fortune. Target is spending $100 million to swap out machinesand issue its own chip-based cards.

What does it mean for consumers?

• Approximately 120 million Americans have already received an EMV chip card and that number is projected to reach nearly 600 million by the end of 2015, according to Smart Card Alliance.
• A big difference for consumers will be the act of inserting the card and remembering to remove it from the terminal. There will also be prompts asking for a signature or PIN to complete the transaction.
• Many of the nation’s banks will be issuing EMV credit cards when the current card expires. Consumers with questions about receiving the replacement cards should contact their bank.