The Advent of EMV and What It Means for You —
EMV stands for Europay, Mastercard and Visa. It is a system which incorporates technology that will standardize the means by which credit and debit cards (collectively “chip cards”) will communicate with card readers and provide a way for customers to buy products from the widest possible variety of merchants and merchant services.Current card readers rely on the ability to read a “magstripe” or magnetic strip affixed to the back of each credit card and debit card. Stored in this magnetic memory is the information necessary to verify the identity of the account associated with the purchase.The current merchant services system is inherently insecure, however. Since the information on the magnetic stripe can be easily read by any card reader hardware, it can be read by anyone with such hardware, even someone who is not processing a sale.
The new EMV system depends on a combination of a chip built into each card and a means of digitally “signing” each transaction to ensure that even if the data from one transaction is available to someone who is trying to gain unauthorized access to the account, that data is not usable for a second transaction, as that second purchase will have its own digital “identity.” These capabilities are built into EMV readers.
This is all accomplished through the use of strong cryptography and independent verification of the card and account credentials at the point of purchase by the chip card and the EMV reader. In theory, the system will either make it impossible or extremely difficult for an unauthorized third party to make a purchase without authorization from the account holder.
Three of the major U.S. card providers have implemented plans for a roll-out of new EMV compatible systems beginning in October of 2015. The United States is the only G20 nation that has not committed to EMV as a standardized means of processing card-based payments, even though there are over 23 million EMV readers deployed so far.
Ironically enough, it may be contact-less payment systems that drive the adoption of systems like EMV. Mobile payment and contact-less payment options are growing in both availability and popularity. Since these systems can independently verify authorization for transactions and further, can modify their authorization systems, they will provide good competition for future EMV innovation and adoption rates.