Chipping Away at Card Fraud with EMV


By Roy W. Urrico

The term EMV may be new to many U.S. financial institutions but EMV is not new to much of the world, where more than 1.62 billion EMV cards and 23.8 million EMV terminals are already in use. The EMV specifications define requirements to ensure interoperability between chip-based payment cards and terminals and provide strong transaction-security features and other application capabilities not possible with traditional magnetic stripe cards. The prolific use of mag-stripe cards slowed adoption in the U.S., until now. The standard is just starting its major migration into the United States after a long, sometimes circuitous, implementation journey with the major impetus coming from the major U.S. payment networks—American Express, Discover, MasterCard and Visa—which announced plans for moving to an EMV-based payments infrastructure with transaction liability shifts as incentives for card issuers, merchants and payment networks.

Randy Vanderhoof
Randy Vanderhoof

EMV stands for Europay, MasterCard and Visa, and represents specifications developed as a worldwide standard for the interoperation of smart cards—aka integrated circuit cards (IC cards or “chip cards”)—and IC-card capable point of sale (POS) terminals and automated teller machines (ATMs), for authenticating credit and debit card transactions. “EMV is an open-standard set of specifications for smart card payments and acceptance devices,” says Randy Vanderhoof, executive director of the EMV Migration Forum.

Smart card technology embeds a secure integrated circuit chip with a microprocessor into a form factor. The form factor most often used is a card; though key fobs, microSD memory cards, adhesive stickers, and most recently, NFC-enabled mobile phones can all accommodate the same fundamental technologies.

EMV standards—based on ISO/IEC 7816 for contact cards, and ISO/IEC 14443 for contactless cards—define financial-transaction interaction between IC cards and IC card-processing devices. The first EMV version, developed back in 1995, grew out of a cooperative undertaking by Europay, MasterCard and Visa to guarantee the security and worldwide interoperability of chip-based payment cards. Europay International SA was absorbed into MasterCard in 2002. JCB (formerly Japan Credit Bureau) joined the organization in December 2004, and American Express joined in February 2009. In May 2013 China UnionPay became the latest member with UnionPay now having an equal 1/5 interest in the standards. Over the years, EMVCo has maintained and revised the specifications to sustain the highest level of security. EMVCo also develops and manages any new market-required functionality.

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