Are you familiar with the now-defunct company called Europay? If you’re not, then perhaps you’ve heard of Mastercard. And well, if those two don’t sound like something you’ve come across before the name Visa will surely ring a bell.
These three names; Europay, Mastercard, and Visa, belong to financial service companies in the United States. Together, they form the acronym EMV.
Curious to know what this has to do with EMV Cards. Here it is. Europay, MasterCard, and Visa (EMV) all form a kind of governing body. What they do is simple. They create the standard for chip-embedded cards.
In other words, these three companies serve as a global authority on how smart chip cards should function and what policies should follow the use or implementation of these cards.
What is an EMV Card?
An EMV Card is a type of smart chip card that functions based on standards set by Europay, MasterCard, and Visa (EMV).
Needless to say, EMV cards are special. This type of card makes use of a metallic chip, programmed to work with the latest and most advanced banking and finance technologies, including ATMs and PoS machines.
They stand out from non-EMV cards that make use of magnetic stripes and feature far less security.
How an EMV Card Works
If you have an EMV chip card with you, you’re going to use it just like you do any other type of card. However, we must mention that only an EMV card reader can be used to process payments from an EMV card.
So how does the card work? Let’s illustrate it.
You purchase at a supermarket. Once you’re done shopping, you head to a counter, take out your EMV card and hand it over to the cashier standing by.
Since it is an EMV card, the cashier takes out an EMV card reader to be used for the transaction. They input details such as items purchased and payment amount onto the card reader. Next, they swipe the card against the reader. This action activates the card and prepares it for the debit transaction.
Your EMV chip card is now activated. What it does, then, is to assess the details of the transaction from the reader. The assessment reveals what amount of money will be debited, the recipient’s account number, and many other critical information. After getting all the details, your EMV chip card performs a small trick by generating a one-time token for the transaction.
Indeed, EMV cards are so advanced that they can perform tokenization.
Tokenization involves the creation of a surrogate value to replace sensitive data. In the case of an EMV card transaction, the sensitive data that is worth protecting is your card number (printed on the card). Bad actors make use of exposed card numbers to create false transactions and defraud people. This explains why the tokenization feature on EMV smart cards is so important.
The token generated by your EMV card is unique and will differ for every transaction. In addition to this token, you will be required to input your card PIN on the reader. Such combinations enhance the overall security of the technology.
Types of EMV Card
1. Contact EMV Card
The regular EMV card which you have to insert into a POS machine is the contact type. To explain, the card has to make physical contact with the payment machine.
2. Contactless EMV Card
A contactless EMV card makes use of Near Field Communication (NFC). To make a payment, users will simply tap their contactless card on a POS machine or wave it close to one.
Pros and Cons of EMV Card
Pros
Security: Security is the top selling point for EMV cards. The variety of features available on these cards makes them highly secure. Users, therefore, stand a chance against card-present fraud and many other types of scams.
Resourcefulness: EMV card tokenization allows for a special kind of operation known as the Card on file. This lets businesses securely store a user’s information (in the form of tokens) when they make a transaction for the first time. Doing so reduces the need to repeatedly process a card every time it is being used. The benefit of the Card on file operation is that it reduces the number of failed card transactions. Moreover, less resources are used after the first transaction by a specific user.
Global Interoperability: You’d find a business or store that accepts EMV card payments almost everywhere around the world. Ultimately, this means you don’t have to worry about international payments when travelling abroad.
Cons
- Damage Prone: EMV cards are prone to a problem in which the embedded chip becomes damaged. The smart chip might accidentally get into the water, get scratched, or become worn out from consistent usage. Any of these situations could render the card permanently useless.
EMV Cards vs Non-EMV Cards
EMV cards contain a metallic chip whereas non-EMV cards contain a magnetic stripe. This one difference sets the stage for most of the other differences linked to these two types of cards.
For example, the metallic stripe technology on non-EMV cards allows the card information to be easily copied. Fraudsters often use a card reading device to do this.
Secondly. the metallic chip on EMV cards allows for the storage of a large volume of data. On the other hand, only a few pieces of data such as the user’s name, account number, and PIN can be stored on non-EMV cards.
One final way in which both EMV and non-EMV cards differ is in terms of security. The chip in an EMV card allows for symmetric and asymmetric cryptographic encryption. It also enables PIN signatures and other security combinations.
Conclusion
Since its development in Europe in 1986, the EMV smart card has gained widespread adoption across the globe. The technology continues to advance with new features coming on the scene. It has successfully put non-EMV cards (which were developed in the 60s’) out of the limelight and there’s a lot to prove that the technology is here to stay.