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There is no doubt that EMV will significantly alter the U.S. payments industry, bringing advanced security to the point of sale while paving the way for innovative breakthroughs like mobile payments.
EMV adoption will take years, but it will dramatically alter the consumer experience—and the payment industry. Think of the major shifts that occurred when electronic processing, or e-commerce were introduced. Like them, this shift will be disruptive, but ultimately, highly positive, and will open new pathways for business.
EMV stands for Europay, MasterCard and Visa. These three organizations introduced a new global standard for payment cards based on innovative chip technology. There are over 1 billion EMV cards in circulation globally, along with nearly 20 million EMV terminals.
In the U.S., every physical point-of-payment system that now accepts a mag-stripe card will be updated to accept contact and contactless EMV cards, related key fob, watch, or other devices—as well as mobile payments via an NFC (Near Field Communication) contactless interface.
Why EMV? Because it helps authenticate the cardholder and therefore reduce the fraud associated with purchases made with counterfeit cards at a physical point of sale. Chip-embedded cards are inherently more secure, since they authenticate via a dynamic value assigned remotely for each transaction. Mag-stripe cards are statically-authenticated, local in nature, and therefore, easily ‘skimmed.’
While there are 2 ways to authenticate an EMV card—through signature (Chip) or PIN verification--Visa mandates global interoperability, which means that merchants must be able to process both Chip and PIN cards.
Incentives to Adopt EMV
Visa has introduced ‘carrot-and-stick’ incentives to motivate U.S. merchants to adopt the dual-interface terminals that enable EMV. The ‘duality’ describes their ability to actually process EMV contact/contactless cards and Mobile NFC contactless payments.
EMV helps authenticate the cardholder, reducing fraud at a physical point of sale. To further protect cardholder data, merchants must also enable technologies like end-to-end encryption (E2EE) and tokenization that prevent attacks related to data breaches.