MasterCard, Visa, Discover, and American Express are pressuring the U.S. market to make the switch from magnetic stripe cards to new EMV smart chip cards. Although magstripe cards have been the standard in America for decades, EMV technology promises to revolutionize the U.S. payments ecosystem by offering some new benefits to customers, merchants, and processors.
1) EMV allows more secure card-present transactions
The big sell for EMV smart cards is that they offer better transaction security to all parties involved in the payment process. Traditional magstripe cards store all of their information in a single magnetic stripe (hence the name). Although this allows a simple swipe to complete a transaction, it also means that the card’s information can be intercepted by skimmers, then used to create fraudulent cards.
EMV cards store their information in microprocessor smart chips, and they are encrypted to protect that data. It’s much more difficult to acquire the data, and it’s also more difficult to create fraudulent cards because that requires the technology to duplicate the microprocessor chip and the encryptions that protect its data.
EMV cards also have many options for cardholder verification, which helps protect both consumers and businesses from fraudulent spending and transactions.
2) EMV supports contact, contactless, and mobile transaction types
EMV technology supports more than contact (“chip-and-pin”) transactions. It also enables contactless transactions, where cardholders tap their cards against the terminal. Whereas contact payments require the card to be inserted into the terminal for the duration of the transaction, contactless payments are as fast (or even slightly faster) than traditional swipe payments conducted with magstripe cards.
EMV technology is also a platform for secure, fast mobile wallet payments, which allow customers to wave their smartphones over a terminal rather than dipping or tapping a card. Because mobile wallets are one of the other trends in the payment industry, EMV support for mobile transactions allows a merchant to invest in a single system to open multiple options for customers.
3) EMV is a global standard
With EMV poised to phase into the United States market, it will become a global standard for both card and mobile payments. This is good news for customers and domestic merchants.
American consumers will be able to use their own smart cards while traveling (magstripe cards have fairly high rejection rates because EMV is more common around the rest of the world).
Foreign consumers will also be able to use their own smart cards while traveling. Merchants in tourist-drawing U.S. cities will find EMV a lucrative prospect; allowing tourists to spend money from their own smart cards or mobile wallets will attract additional customers, make the checkout process faster, and may encourage extra spending.
4) EMV payment brands offer PCI relief for compliant merchants
For many merchants, PCI compliance is another headache to address on a regular basis. In order to encourage merchants to make the transition to EMV technology, payment brands are pushing for PCI-specific relief. The hope is that this move will offset upgrade costs incurred by the merchant, thus allowing them to make the transition without great cost.
5) EMV systems can operate in offline mode
Because EMV cards contain microprocessors that can actually interact with terminals, they can perform offline transaction verification and offline cardholder verification. Terminals can be configured to accept offline PIN codes, a feature not supported by magstripe cards. EMV cards can use verification data from their own microprocessor smart chips to verify PIN codes and create cryptograms, improving transaction security without requiring an online connection to banking systems.
Interested in EMV solutions?
Host Merchant Services offers EMV solutions for business owners. If you’re interested in getting a head start on the rest of the U.S. market, contact an HMS sales representative today and ask about our EMV-compliant equipment and processing options.