What is EMV®?

Clover Flex EMV card reader processing a chip-enabled credit card

Since its introduction to the United States in 2011, EMV chip technology has dramatically:

  • Improved credit card security
  • Reduced in-store payment fraud

EMV technology has also allowed customers to use their cards abroad with greater convenience and confidence.

What are EMV credit cards, and how do they protect businesses and consumers from payment fraud?

The Basics: What Is EMV Chip Technology?

Short for “Europay, Mastercard, and Visa,” EMV credit cards come with embedded “smart chips” that offer much greater protection against fraud than their traditional magnetic stripe counterparts.

These embedded security chips are very difficult to clone. To successfully complete an in-store transaction at an EMV-enabled card terminal, the original version of the card (and chip) must be physically present.

Most of the world had already graduated to EMV payments by the time the technology arrived stateside in 2011. Yet, to speed the transition to this more secure standard, the U.S. introduced new liability rules in October 2015. Merchants and card-issuing banks that didn’t make the switch would be responsible for any losses resulting from fraudulent activity. They would also be subject to punitive fines.

As of 2018, more than 842 million chip cards have been issued to U.S. consumers.1

How Does EMV Technology Work?

EMV chips can store far more information than magnetic stripes. This allows EMV credit cards to hold encrypted data, which helps protect against in-store payment fraud.

Better still, this encrypted data is dynamic, meaning the information can change over time.

Whenever an EMV card is used for an in-store payment:

  • The customer “dips” his or her plastic into a chip reader at the point-of-sale (POS) terminal
  • The EMV chip generates a unique transaction code that can never be used again (by anyone else)

The transaction code prevents EMV credit cards from being compromised – even if they fall into the wrong hands because a fake card would not be able to generate the proper code.

Because the rest of the world has already adopted EMV payments, Americans who still rely on legacy plastic often face difficulties when they shop abroad. However, using EMV cards helps to remove restrictions when buying in-person from merchants around the globe.

Many stateside businesses still use legacy credit card readers instead of the more secure EMV chip standard. As the next section explains, their numbers are dwindling as the payment landscape continues to shift.

A Brief History of US EMV Card Adoption

Credit card chip technology is more secure than magstripe plastic. Still, making the shift to EMV payments proved to be very expensive for small businesses that couldn’t afford the necessary hardware upgrades to their POS systems.

In an effort to facilitate EMV adoption, fraud liability rules were altered in 2015 by U.S. credit card issuers:

  • Mastercard
  • Visa
  • Discover
  • American Express

After October 1, 2015, liability for in-store counterfeit fraud shifted to whichever side of a transaction wasn’t EMV-ready – either the merchant or the card-issuing bank.

As such, non-compliance with EMV chip cards became more expensive than upgrading one’s payment environment. Adoption of the more secure standard began to go mainstream in the U.S.

Since these liability rules went into effect, in-store payment fraud has dropped significantly. U.S. merchants that made the switch saw counterfeit fraud plummet 76 percent between September 2015 and December 2018.2

Credit card chip technology has proven so effective at combatting in-store fraud that, starting in April 2018, Visa, Mastercard, American Express, and Discover decided they will no longer require signatures to verify card-based purchases.3 

Retailers can still optionally require signatures to verify a cardholder’s identity, but this is at their discretion. Dropping the signature requirement will ultimately help streamline the checkout process without compromising credit card security.

Payment Solutions That Tie to EMV Chip Cards

The most popular type of EMV technology comes in the form of a physical credit card that users must dip into a chip-enabled terminal. This payment option comes in other varieties as well, including:

  • Contactless EMV cards
  • Mobile EMV technology
  • Wearable EMV technology

What Do EMV Credit Cards Mean for Merchants?

More than 3.5 million merchants now accept EMV chip cards.2 That number will only continue to increase as more businesses:

  • Grow to appreciate how chip cards can help reduce fraud
  • Face penalties by not complying with the new liability rules

Merchants that don’t make the switch, however, will become easier targets for criminals. Because thieves tend to go after the lowest-hanging fruit, they will increasingly focus their attention on those businesses that continue to only accept magstripes.

What Does Credit Card Chip Technology Mean for Gas Stations?

The gasoline station industry has been slow to adopt the EMV card standard – primarily because of cost.

According to the National Association of Convenience Stores (NACS), it will cost gas stations an estimated $4 billion to replace card readers. These upgrades often require that gas stations replace their pumps, hardware, and software to make the transition complete.4 

Visa and Mastercard are requiring gas stations make the switch from magnetic strip card readers to EMV readers at pumps by October 2020. Gas station operators that don't meet the deadline may incur penalties, with liability for fraudulent charges transferring from financial institutions to station owners.

The fraud prevention movement should continue paying close attention to the growing pains that gas stations currently experience as they make the transition to EMV payments.

Why Every Business Needs EMV Credit Card Processing

The need for EMV credit card processing all comes down to a few key points:

  • Greater security and enhanced fraud protection
  • Reduced risk of fraudulent losses, penalties, and litigation
  • Peace of mind for patrons that their data will stay secure

Although making the switch to EMV chip cards isn’t free, the above benefits more than pay for themselves.

Should Customers Also Switch to EMV Credit Cards?

In one word: absolutely.

Just as EMV protects financial institutions and merchants, it protects customers.

When a customer uses an EMV-enabled card or device at checkout it never leaves his or her hand. This alone helps reduce potential “in-house” fraud committed by an employee.

The unique transaction code that EMV cards create also provides peace of mind to users. They know they’re better protected from fraud and abuse when making in-store purchases with EMV chip technology.

EMV Payments With First Data

First Data is all about technology, collaboration, and customer service. We stand ready to handle the payment needs of all businesses, whether it’s to:

  • Help smaller merchants understand how mobile wallets can affect their bottom line
  • Educate large financial institutions how to manage EMV credit card manufacturing

Below represents just some of the EMV-enabled equipment options that mesh seamlessly with our PCI-compliant processing solutions.

1. Clover Go

Clover Go is perfect for anywhere your business goes. No matter where your business takes you, your customers are free to pay however they choose, whether it’s via:

  • Apple PayTM
  • Samsung PayTM
  • Android PayTM
  • Contact EMV chip cards
  • Contactless EMV cards

2. Clover Station

The Clover Station is a POS system that allows business owners to run their entire business all from one convenient device.

Just like the Clover Go, the Clover Station is EMV-enabled and can also accept standard credit cards, debit cards, and contactless payment solutions.

If barcode scanners or other peripherals are needed to run your business, that’s no problem. You can easily add them to your Clover Station.

Protect Your Payment Environment With EMV Technology

Get information on how you can set up an EMV account with First Data, whether you run a:

EMV is a registered trademark in the U.S. and other countries and an unregistered trademark elsewhere. The EMV trademark is owned by EMVCo, LLC.

  1. “Worldwide EMV® Deployment Statistics,” emvco.com, April 2019
  2. “Chip technology helped reduce card-present counterfeit payment fraud by 76 percent,” Visa, December 2018
  3. “Signature Optional!” Visa, 5 April 2018
  4. “How EMV Technology Affects Financial Institutions,” SWBC, 22 March 2018