EMV transactions can be authorized either online or offline, depending on the merchant’s preference and upon the situation. In most cases, online authorization is preferred.
When an EMV smart chip card is programmed, the issuer can configure it to permit both forms of transaction authorization. In this case, parameters define when one form of authorization will be preferred.
This form of transaction authorization is already in use today, and it is largely the same between EMV and magnetic stripe cards.
In an online authorization, the terminal sends the transaction data and a unique cryptogram to the card issuer. The issuer then verifies the transaction and chooses to accept or decline.
Offline authorizations typically occur when a terminal lacks internet connectivity. Offline authorizations may also be faster because they do not involve sending transaction data to another party and awaiting a response.
In an offline authorization, the terminal and the card jointly determine, based on risk parameters, whether to authorize the transaction.
Interested in EMV compliance?
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