The Future of Chip Cards
As consumers continue to adopt and demand faster, more secure solutions, EMV will increase in importance.
Having been in Europe and Australia for some time EMV is finally being implemented in the US, China and India. EMV (which stands for Europay, MasterCard and Visa – the original founding members) is a worldwide standard created in the mid‐90s for authenticating credit and debit card transactions that involve chip‐compatible cards and point‐of‐sale (POS) terminals. The group now also includes AMEX, Discover, JCB and China Union Pay.
Despite newer technologies emerging, the chip card market for payment cards is still growing. When introduced in the UK, fraud at stores was slashed by 70 percent. EMV differs from traditional credit cards in how it hides data from potential thieves, making it a pivotal part of the future of payments. It is also well placed to protect against POS fraud as cloning of cards is now impossible.
The countries now implementing EMV are playing catch‐up with the rest of the world. For example, for travellers from the US it often meant turning up to buy a train ticket from a machine in London only to find that their chip‐less card isn’t accepted as the machine – set to only accept chip cards – has no way of reading the magnetic strip. When the card is not present (CNP) things can be just as complicated. Steps to reduce fraud in CNP transactions include dynamic code verification, which is time limited and less susceptible to hacking.
It wasn’t until October 2015 that most banks in the US finally accepted and provided EMV cards. In countries such as China and India, the liability shift (if the ATM or merchant POS does not support EMV, the ATM owner or merchant will be liable for the fraudulent transaction) will take place on the 1 October 2017.
The adoption of EMV means the bar has been raised for merchants as well as hackers. Swipe and sign terminals will soon appear outdated and insecure. Merchants that have not adopted EMV technology will have customers questioning why, and potentially wondering just how safe transactions are using the old method.
As consumers continue to adopt and demand faster, more secure solutions, EMV will increase in importance. However, as technology advances and ubiquitous adoption continues globally, fraud will also catch up. POS and CNP transactions have some compelling technology advances on the horizon to combat the increasing risk.