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The Impact of EMV Technology on Payment Transactions

  • EMV chip cards offer superior security compared to old magnetic stripe cards, making it harder for criminals to steal your data.
  • Businesses worldwide are switching to EMV technology because it helps reduce fraud, saving everyone money.
  • If your business doesn’t use EMV chip card technology yet, this article will explain the benefits and show you how to get started.
A graphic timeline of history and development of EMV chip card technology

The History of EMV Chip Cards Technology

Did you know those little metallic chips on your credit and debit cards are part of a global effort to combat fraud?  EMV (Europay, MasterCard, and Visa) technology revolutionized payment security. Curious how these chips came to be? Let’s explore the history of EMV chip cards technology, its benefits, and what it means for your business.


  • Early Smart Cards: EMV has its roots in developing smart cards with embedded microchips that were first launched in Europe in the mid-1980s. France spearheaded this technology with the Carte Bancaire.
  • Need for Interoperability: While these early chip-cards enhanced security within their country, a global standard was needed to ensure consistent functionality when users traveled abroad.

The EMV Standard For Credit Cards

  • Crucial collaboration: In the 1990s, Europay, Mastercard, and Visa (EMV) played a pivotal role by uniting their efforts to establish a unified standard for chip-based payment cards and terminals. The first EMV specifications were published in 1996.
  • EMVCo Formation: EMVCo was formed in 1999. This consortium now includes American Express, Discover, JCB, and China UnionPay and is responsible for maintaining and evolving the EMV specifications.
  • Global Adoption: The impact of EMV technology was not limited to Europe. It sparked a worldwide revolution in payment security. While Europe led the way with a swift and large-scale rollout, other regions, including the United States, eventually followed suit.

Benefits of EMV Chip Cards Technology

  • Enhanced Security: EMV cards are significantly more secure than traditional magnetic stripe cards. Key features include:
    • Encryption: Data is protected during transactions.
    • Dynamic Authentication: Each transaction generates a unique code, making it much harder to duplicate or counterfeit cards.
  • Effective Fraud Reduction: Regions that adopted EMV witnessed a significant drop in card-present counterfeit fraud, showcasing this technology’s robust security features.

United States Adoption

  • Sluggish Start: The US lagged in adopting EMV due to the high cost of business infrastructure upgrades.
  • Liability Shift: A critical turning point was the 2015 liability shift. After this date, the party (merchant or card issuer) not using EMV technology became liable for counterfeit fraud losses. This spurred wider adoption of EMV across the US.

Continued Evolution

  • Contactless EMV: Contactless payments using embedded EMV chips gained popularity due to their speed and convenience.
  • Mobile Payments: EMV technology is integrated into mobile payment solutions like Apple Pay and Google Pay, allowing secure payments using smartphones and smartwatches.

H2 – How EMV Chip Technology Works

Key Components:

  • The Chip: An EMV card’s embedded microchip is the core of its enhanced security. It stores card data and has cryptographic processing capabilities.
  • The EMV Card Reader: This is a special terminal that can read and interact with the EMV chip on the card.

The Transaction Process:

  1. Card Insertion/Tap: Instead of swiping, insert your EMV card into the reader or tap it on a contactless reader.
  2. Chip Authentication: The card reader authenticates the chip as genuine, ensuring the card itself hasn’t been counterfeited.
  3. Dynamic Data Generation: The chip and the card reader create a unique transaction code (a cryptogram) specific to that purchase.
  4. Authorization: The transaction code, along with other details, is sent to the card issuer’s bank for approval.
  5. Approval or Decline: The issuer’s bank analyzes the data, approves or declines the transaction, and sends a response back to the terminal.

Why is EMV more secure?

  • No Static Data: Each EMV transaction generates a unique, one-time code. This means even if a thief intercepts the data from one transaction, it cannot be reused to duplicate the card or make fraudulent purchases. This is a major improvement over magnetic stripe cards, where the static data on the stripe can easily be copied.
  • Encryption: The cryptographic processes in the chip and the card reader further secure data transmission.

Additional Features

  • Chip and PIN: In some regions, transactions may require you to enter your PIN in addition to inserting or tapping the chip, adding another layer of authentication.
  • Offline Authentication: Sometimes, the chip contains data allowing offline authentication, speeding up transactions where connectivity may be slow or unreliable.

The Benefits of EMV Cards

Feature/BenefitEMV Chip CardsMagnetic Stripe Cards
SecurityAdvanced encryption and dynamic authenticationBasic encryption, static data
Fraud ReductionSignificant drop in card-present fraudHigh risk of counterfeit fraud
Global AcceptanceWidely accepted internationallyLimited acceptance in some regions
Technological AdvancesSupports contactless and mobile paymentsNo support for contactless payments
Fraud LiabilityReduces liability for merchantsHigher liability for merchants
Travel CompatibilityExcellent, due to widespread adoptionCan face issues abroad

EMV cards offer several key benefits over traditional magnetic stripe cards:

1. Increased Security

  • Dynamic Authentication: Each EMV transaction generates a unique code, making creating a counterfeit card using stolen data near-impossible. This drastically reduces card-present fraud.
  • Encryption: Encryption protocols protect sensitive cardholder information during data transmission.
  • Chip Difficulty: The microchips in EMV cards are exceptionally difficult to replicate, adding another layer of protection against counterfeiters.

2. Reduced Fraud Liability

  • Liability Shift: In many regions (like the US), financial liability for counterfeit fraud losses falls on the party (merchant or issuer) that is not EMV-compliant. This encourages businesses to upgrade to EMV-capable terminals.

3. Global Acceptance

  • EMV Standard: Since EMV is the international standard, these cards work seamlessly across different countries and regions, making them ideal for travel.

4. Supports Contactless Transactions

  • Speed and Convenience: The technology behind EMV cards also allows for “tap and pay” contactless transactions, offering a faster and more convenient checkout experience.

5. Foundation for Mobile Payments

  • Secure Element: EMV technology is used to secure payment information in mobile wallets like Apple Pay and Google Pay.

Overall, The switch to EMV has significantly decreased card-present fraud globally. While not foolproof, EMV technology makes it much more complex and less lucrative for fraudsters to exploit credit and debit card data.

How to Implement EMV Chip Technology in Your Business

1. Assess Your Needs

  • Current Equipment: Evaluate your existing point-of-sale (POS) systems and card terminals. Determine if they are EMV-compatible or whether you need upgrades.
  • Transaction Volume: Consider the volume of card transactions your business processes. This will influence your hardware and software choices.
  • Business Type: Do you operate a brick-and-mortar store, an e-commerce site, or a combination? Understanding your business model helps tailor the implementation process.

2. Choose an EMV Solution

  • EMV-Capable Terminals: Research and select EMV-compliant card terminals that suit your business needs. Options include standalone terminals, integrated POS systems, and mobile card readers.
  • Payment Processor: Choose a payment processor specializing in EMV payment processing for smooth implementation.
  • Software Updates: If your payment software doesn’t support EMV, you must update or switch to a compliant solution.

3. Procurement and Installation

  • Hardware Acquisition: Purchase or lease the necessary EMV terminals from a vendor or through your payment processor.
  • Installation and Setup: Arrange for the installation of terminals and integration with your POS system. This may involve your payment processor, hardware vendor, or an IT specialist.

4. Staff Training

  • Transaction Process: Train your staff on using the new EMV terminals and the changed processes for card-based transactions (inserting vs swiping, processing contactless payments, etc.).
  • Customer Education: Consider informing your customers about the change to EMV and its benefits.

5. Testing and Certification

  • System Testing: Thoroughly test your updated system to ensure smooth EMV transactions and compliance with security standards.
  • Certification (Optional): While not always mandatory, seeking EMV certification provides extra compliance and assurance.

Additional Considerations

  • Cost: Be prepared for new equipment and possible software updates. Assess potential long-term savings due to reduced fraud liability.
  • Ecommerce: If you have an online store, ensure your online payment gateway supports EMV transactions.
  • Customer Communication: Be proactive in communicating the shift to EMV to your customers, highlighting potential changes in the checkout process and the increased security.

Important Note: Consult your payment processor for specific recommendations and assistance tailored to your business.


Q: What is EMV, and why is it important? 

EMV (Europay, Mastercard, Visa) is a global standard for chip-based credit and debit card transactions. It offers increased security compared to traditional magnetic stripe cards.

Q: Why EMV cards are more secure? 

EMV cards have a microchip that generates a unique code for every transaction, making it extremely difficult to create counterfeit cards. This dynamic data greatly reduces fraud compared to static magnetic stripe information.

Q: Can EMV chips be demagnetized?

No, EMV chips cannot be demagnetized. They use a microchip for data storage and processing, not magnetic technology.

Q: Can I still use my EMV card at stores without chip-readers? 

Yes! EMV cards have a magnetic stripe for backward compatibility. However, the transaction won’t have the same level of security as a chip-enabled transaction.

Q: Will EMV completely eliminate card fraud? 

Unfortunately, no. While EMV drastically reduces card-present counterfeit fraud, it doesn’t address all types of fraud (like online fraud). It’s important to remain vigilant and protect your card information.