Term: EMV

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The EMV chip card contains an EMV chip which is a “smart chip” technology that offers enhanced anti-fraud protections above and beyond the traditional magnetic stripe for card present transactions. EMV is a standard that was developed by EuroPay, MasterCard and Visa in 1999. EMV has been in use in Europe and Canada for some time. EMV compliance was supposed to be required of merchants and processors by October of 2015. To enforce compliance, the liability for fraudulent transactions involving EMV chip card present transactions was shifted from the card issuer side of interchange to the merchant and acquirer side of interchange. Essentially, whoever is the least EMV compliant in a EMV chip card present fraudulent transaction gets stuck with the bill.

When an EMV card is inserted (“dipped”) into an EMV ready terminal, the chip in the card talks directly to the payment card issuer that issued the card to the cardholder. The issuer’s system verifies the authenticity of the card, authorizes the transaction and a unique transaction number which can’t be used again is created. Even if a hacker or employee stole the chip information from that sale they couldn’t create a duplicate card because the transaction number would no longer be valid. This communication between the chip and the issuer, along with the creation of the transaction number takes a little bit longer than the traditional swipe. The length of time can vary from merchant to merchant depending on their equipment.

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