Credit Card Industry Update on EMV

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Image of the chip on a credit card

Credit Card Industry Update on EMV

As a short review of matters of interest in the credit card industry, here is a notable update from this past year. The Europay Mastercard Visa initiative, or EMV for short​, completes its first year of adoption here in the U.S., which requires all point-of-sale systems to be able to process credit and debit cards embedded with a computer chip, in addition to the standard mag stripe. The idea was to cut down on credit card fraud by eventually eliminating transactions from mag stripe cards that are proven to be so easy to counterfeit. This massive change was exacerbated by the myriad of pieces and players to make it all happen. ​

Firstly, card issuing banks had to issue new cards to all cardholders (and still are doing so!), then merchants had to replace terminals and POS systems that could read the new chip cards, then the authorization networks had to certify all the various credit card terminals to transmit this new data format, then the merchant service providers had to manage the communications and expectations of its merchants that accept cards in a face-to-face environment, then the new chargeback​ rules had to be adopted and put in place, and it goes on and on.

Additionally, the most secure type of EMV transaction whereby a unique PIN number could be used (called Chip and PIN) is available, but certifications for this application’s technology have been slow and only a handful of equipment currently on the market can utilize Chip & Pin technology. ​In addition, when EMV was first deployed, it was discovered that restaurants could not add a tip to the sale because the sale data had to be entered while the consumer’s card was in the terminal – not easy in that environment.