EMV is the name of the global standard for chip payment cards and is based on widely used and highly secure smart card technology.
EMV specifications are maintained by EMVCo.
Chip payment cards are standard-sized bank cards that have a microprocessor, or a mini computer, embedded in the card that meet requirements of the EMV standard.
Today, the U.S. is in the midst of migrating to chip payments.
The U.S. market is larger than all of Europe’s payments markets combined, making it the largest individual market to convert to chip cards.
After October 2015, the payment brands will shift the responsibility for any fraud resulting from a payment transaction to the party using the least secure technology.
If neither or both parties are EMV compliant, the fraud liability remains the same as it is today.
According to EMVCo, as of December 2013:
2.37 billion chip payment cards are in use.
99.9% of terminals in Europe are chip-enabled.
84.7% of terminals in Canada, Latin America, and the Caribbean are chip-enabled.
Overall, there are approximately 1.2 billion payment cards and 12 million POS terminals in the U.S.
By the end of 2013, an estimated 17 to 20 million chip cards had been issued to U.S. consumers.
Millions of EMV-capable terminals and ATMs have been installed, some of which are accepting chip cards today.
The embedded microprocessor (computer) in a chip card provides strong transaction security features and other application capabilities not possible with traditional magnetic stripe cards.
Chip payment technology prevents counterfeit card fraud in two ways:
The first way is the storage of the cardholder data and security keys inside the chip. Even if chip data were to be copied, it could not be used to create another chip card using the same data.
The second way is by a one-time, unique code, called a cryptogram, generated by the chip during each payment transaction. The cryptogram proves that the card is authentic and that the transaction data was unique to that card. Therefore, any use of the same unique card data would be detected by the issuer and the transaction denied.
EMV chip transaction data excludes other data needed for magnetic stripe transactions, so it cannot be used to make a fraudulent transaction in an EMV or magnetic stripe environment.