EMV stands for “Europay, MasterCard, and Visa.” EMV chip technology is becoming the global standard for credit cards and debit cards. This is a method to help combat fraud by generating a unique code with every transaction you make.
In comparison to the magnetic stripes on traditional cards, they contain unchanging data so if a hacker ends up getting this information somehow, fraud could occur.
How EMV Chip Credit Card Technology Works
It was created by credit card issuers and merchants to prevent criminals from stealing precious info and money. Traditional mag-stripe credit cards are encoded with the same payment information and when a magstripe card is stolen, the thief can immediately use it to make unauthorized transactions.
EMV cards contain a computer chip that contains dynamic information. Each transaction made produces a new, unique transaction code. No transaction codes are ever repeated, so each code becomes useless following the completion of the transaction.
When an EMV card is inserted into a chip reader, the card essentially tells the reader that it is authentic, and the transaction is processed without any data exchange.
Instead of swiping your card through the reader, you insert the chip side of your card into the reader’s end and leave it there until the authorization process is complete. There are some cards out there with NFC technology which simply means that it enables contactless payments so you can just hold it close to the reader until the authorization process completes.
Some EMV systems require you to enter a four-digit PIN during authorization. It is more common to sign the POS screen or a printed receipt, as you would in a traditional magstripe transaction, known as chip-and-signature.
Benefits of EMV Credit Cards
- No Phone or Internet Connection Required: Though a reliable connection is required to actually process the payment, cards can be authorized at the point of sale and processed in waves at the end of the business day, or whenever is convenient for the merchant. This was designed to avoid high telecommunications costs and benefits unconnected or low-connectivity environments such as outdoor markets, festivals, and more.
- Chip Cards Are Accepted All Over the World: New credit card readers can read chips and magstripes with equal ease so if your bank has not embraced the EMV chip yet, you could still use your credit card. In the past, whenever you would travel overseas, they would not accept stripe card transactions so many travelers would have to resort to another form of payment such as cash. Now, U.S.-issued EMV cards can be used freely.
- Chip Transactions Are More Secure: As other nations adopted EMV technology, the U.S. has slowly adopted this in the credit card security. The EMV chip is set to reduce credit card fraud.
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If you are currently using a credit or debit card with a little chip at the end of it, you should learn a bit more about it. This little chip is called an EMV chip that was produced to help lower or prevent credit card fraud from occurring.
In simple terms, this chip will create a different transaction code for every purchase made. The magnetic strip only uses one code so if someone gets a hold of this code, they can surely commit fraud on your card.
Soon enough, we will slowly switch from swiping to inserting our cards when making a payment.