EMV Cards………Benefiting the entire payment value chain
EMV is embedded with the promise of reduced card payment fraud and enhanced global payments interoperability, and when combined with additional layers of security (like encryption and tokenization), it will definitely benefit the entire payments value chain. As the U.S. payments industry opts in into chip and pin, issuers and merchants are already flowing along in this new era of payment.
Because of EMV’s proven ability to dramatically reduce card payment fraud, there is a steady drumbeat that has pushed the U.S. electronic payments industry toward implementation. Now is the time for all major stakeholder organizations to take a seat at the table to collaborate on what form the new payments infrastructure should take. There are many options to consider and decisions to be made, but from lessons learned around the world it appears that EMV in the United States will confer the greatest fraud reduction and usability benefits if it is based on Chip and PIN with online authorization, with dual-interface chips and terminals that support both contact and contactless transactions to help support the consumer push towards mobile payments. This combination would seem to serve the greatest need and provide the most security value. In addition, stakeholders must plan for ways to educate consumers to minimize their confusion and problems with adopting the new payment procedures
Although EMV is often equated with “Chip and PIN,” they are not the same thing. Chip and PIN is just one possible implementation of the EMV technology. In fact, the technical specifications for EMV-enabled cards do not require a PIN, or a signature, or any other form of cardholder identity verification. Rather, the issuing bank specifies which cardholder verification services are required for a transaction with rules it places on the chip. Regardless, it is widely accepted that the combination of card validation via the chip, and cardholder authentication with a PIN provides the greatest protection against common consumer-level attacks like fraudulent use of lost or stolen cards, counterfeit cards and skimming
As global experience demonstrates, the adoption of chip technology can reduce fraud at the POS but can also drive higher card-not-present (CNP) fraud. In tandem with bringing in EMV at the POS, the issues of CNP have been addressed strategically with additional security layers such as fraud protection solutions and increased verification methods. This means that the infrastructure required to facilitate EMV payments are already in place, regardless of any remaining uncertainty surrounding how financial institutions choose to issue chip cards or merchants choose to accept them.