What is EMV?
Simply put, EMV stands for: Europay, MasterCard, and Visa.
But this simple acronym definition doesn’t truly answer the question: What is EMV? To help you better understand EMV and its implications and complications for merchants, we’ve put together some quick facts that will help you learn more about this fairly new technology.
- EMV is a worldwide global standard for chip-based debit and credit cards. This is a combined initiative between Europay, MasterCard and Visa to create and guarantee better security and international acceptance of MasterCard and Visa.
- The chip technology embedded in these credit and debit cards offers better security against fraud and theft, and it also allows, for example, Canadian chip-card holders to use their debit cards in the United States.
- The chip on EMV cards stores customer information, making it harder for your customers to have their information stolen during transactions. Unlike the older magnetic strip cards, these EMV cards cannot be copied or cloned.
- When an EMV card is used, a unique transaction code is created and used––it’s this transaction code that provides the extra layer of security.
- While EMV cannot prevent fraud 100%, it can greatly reduce the rate at which it occurs.
- In April of 2016, 70% of U.S consumers were using EMV cards, and as of December 2016, 50% of U.S. merchants were EMV-compliant.
So, this all sounds very good. Better security, less risk of cloning cards, a unique authentication code––for anyone who buys, sells, or manages payments, this looks on the surface like a fraud-proof solution.
Well, sadly, EMV has not been the fraud-proof solution everyone was hoping it would be. As you might have noticed in the list above, we didn’t highlight the security of online, telephone and mail-order purchases.
For CNP merchants, EMV technology has not made an improvement in the fraud numbers. In fact, merchants in the United Kingdom, where EMV was implemented a number of years prior, experienced a 62% increase in so-called friendly fraud (cyber shoplifting) after moving to EMV, and the Aite Group is predicting that in the U.S. there will be a similar increase with fraud losses reaching $7.2 billion by 2020. (Learn more about EMV and friendly fraud in our white paper – Staying ahead of Evolving Fraud & Security Concerns in the Post EMV World.)
What does EMV really mean for merchants?
As a merchant, you’re likely asking yourself what EMV is actually doing to your bottom line. While not all merchants have made the move to EMV-compliance, we are seeing common threads between our EMV-compliant and non-compliant merchants.
- Non-EMV-compliant merchants are still dealing with the existing risks of chargeback fraud and fraud liability. Nothing has changed here.
- As you know, fraudsters are savvy and often a few steps ahead of those defining standards and compliance measures. This means that even for EMV-compliant merchants, the fraud risk is not gone. In particular, CNP merchants are experiencing higher fraud numbers as fraudsters have recognized that online, telephone, and mail-order sales still present multiple security vulnerabilities.
- Your customers are likely asking more questions about security.
These three points highlight why it is so important for you to no longer rely on older technology and business methods. What worked for you before is not going to work today.
While EMV has enabled consumers to use their credit and debit cards worldwide and has tightened up security for card present purchases, the risks for remote and CNP merchants is on the rise.
With EMV compliance requirements, you need to know that your payments solution is protecting you and your customers at all sales points. As a merchant, you need to be well-versed in all aspects of EMV. Not everything you need to know on what’s EMV can be found in this short article. Please read: Count Down to EMV – Are You Compliant and Ready and The Impacts of EMV. Why Card-Not-Present Merchants Need to Be Prepared.)
Remember, regardless of how you’re doing business now, the future is mobile. More and more of your business is going to be done online, and while you may not currently be a CNP merchant, chances are high that in a few years you will be. Take the time now to learn about EMV and its impacts on the sales process, payment solutions, credit/debit card use, and the risks of fraud to you and your customers.