Credit Card Processing Blog
What Is EMV?

Nov 2, 2015 10:00 AM / by Reliance Star

What is EMV? EMV refers to a smart chip that is built into payment cards and made of fraud-reducing technology. Major credit card companies have adopted EMV as the standard card technology in the U.S. by 2015. These cards are overcoming the older design providing that they are more secure and made in two methods –

Chip-and-Signature – in which consumers must sign for the transaction or,

Chip-and-Pin – in which consumers must enter a valid pin for the transaction.

Although two different methods of security is great, one is greater than the other. Consumers will find that providing a PIN is more secure than signatures, which can be forged. Store owners will find it as more efficient protection against frauds.

But if the PIN method is the most security provided, why have both?

In most parts of the world chip-and PIN is the official method. There are a few reasons why American card issuers and merchants prefer chip-and-signature:

  1. The cost to upgrade. Chip-and-PIN’s will be a costly investment because terminals without keypads are less expensive.
  1. Hesitation to change. Merchants hesitate to invest into something new if they are already prospering without it. Changing something like payment infrastructure could cause consumers to change their shopping habits. Thus, possibly resulting in a decrease in sales.
  1. Potentially lost profits. Although chip-and-PIN demonstrates greater protection against fraud, it carries lower interchange fees. This results in lost profit potential. This is enough incentive to keep using signature verification regardless of the fraud risk.

Topics: EMV