EMV allows for a chip technology that has the added benefit of reducing stolen payment card data.

The distinguishing feature of EMV is a secure chip that is imbedded in the plastic payment card.

Once a card’s data is compromised a counterfeit card would be unusable without the presence of that card’s unique components. This makes the account data hard to steal or compromise and making merchant’s systems safer and more secure.

EMV is an acronym for Europay, Mastercard, Visa and is an international standard for the inside operation of an incorporated circuit cards that are also known as chip cards or IC cards. These cards are a combined venture between Visa, Mastercard and Europay to reduce card fraud and to allow a global payment infrastructure.

In 2002, Mastercard purchased Europay, followed by Japan Credit Bureau (JCB) joining the EMV in 2004 and shortly thereafter American Express in 2009.

The Purpose of EMV Technology

EMV was created to address the card fraud related to magnetic stripe cards. The largest advantage to using the EMV chip is the reduction of card fraud as a result of counterfeit, lost and stolen cards.  EMV also allows for interoperability with any EMV compatible payment device accepted across the world, as well as supporting better cardholder verification and performing secure online payment transactions.

The Requirements for EMV Adoption

Merchants and acquirers will be responsible for costs associated with either upgrading or replacing their POS devices. The smaller merchants should take the lead from their current acquirer or processor. Since more data is sent to the acquirer and processor than the current magnetic stripe transaction, merchants will also need to work with their acquirer or processor to accommodate the transaction messaging.

Fraud –preventing advantages of EMV have allowed the liability of fraud to shift and allow for the potential elimination of the necessary, yet costly, yearly PCI DSS assessments and validations associated with using the magnetic stripe card. This elimination will offset the costs associated with the upgrade or replacement of new POS terminals.

The US Adoption of EMV

One of the largest hindrances to EMV adoption in the United States has been the costs associated with the replacement of cards and the POS terminals. The current EMV adoption around the world (Canada, Latin America, Caribbean, Asia Pacific, Africa and the Middle East, Europe Zone 1 and 2) is currently 62% of terminals and 29% of cards.  Presently the U.S. financial institutions have reported issuing over one million Visa branded, chip enabled cards at the end of 2011, which is around 10% of all Visa branded cards in the U.S.

Visa’s Key Dates of Adoption

April 1, 2013 – Acquirers and processors will be required to support merchant acceptance of chip transactions.

October 1, 2015 – Liability shifts to the party that is the cause of a contact chip transaction not occurring will be liable for the card present counterfeit fraud loss (Does not pertain to automated fuel dispensers).

October 1, 2017 – Liability shifts to the automated fuel dispenser party that is the cause of a contact chip transaction not occurring will be liable for the card present counterfeit fraud loss.

MasterCard Key Dates of Adoption

April 1, 2013 – Acquirers and sub-processors will be required to support merchant acceptance of chip transactions. Cross border Maestro ATM liability shifts to non-EMV ATMs

October 1, 2013 – Account Data Compromise (ADC) takes effect (50%). ADC will represent that if a merchant’s data is breached and depending on whether the merchant has a EMV POS device in place will offer a shift in the liability

October 1, 2015 –100% ADC relief takes effect if the merchant is processing at least 95% of MasterCard transactions on EMV devices. Liability shifts to the party that is the cause of a contact chip transaction not occurring will be liable for the card present counterfeit fraud loss (Does not pertain to automated fuel dispensers).

October 1, 2017 – Liability shifts to the automated fuel dispenser party that is the cause of a contact chip transaction not occurring will be liable for the card present counterfeit fraud loss.

The migration of the U.S. EMV chip based payment standard path has begun with the advent of a single global payment standard for fraud protection, secure payment transactions and worldwide acceptance.