Named after its original owners, (Europay, MasterCard and Visa) EMV or Chip security is now taking its place as the global standard for debit and credit card payments. It is a small microchip inserted in the credit or debit card preventing its owners from fraudulent transactions.
Due to the change in credit card security, banks are slowly phasing out magnetic stripe cards for more authentic methods of payment. This begs the question, why are magnetic stripe cards no longer used? And how are EMV payment systems more secure?
The main reason is that magnetic stripe cards are outdated. Their technology is the same as cassette tapes and has been around since the 60s. Since more than a decade, EMV has been the standard in most European countries while the U.S. still continues to use magnetic stripe technology. Naturally, this has raised many concerns.
Research conducted on credit card fraud in the U.S. revealed an increase of 37% in 2017 when compared with the previous year.
Let’s discuss some of the reasons as to why EMV payments are considered more secure.
High level of difficulty in cloning chip cards
Whenever you swipe magnetic stripe cards, the payment processor matches them to your bank account by reading the magnetic field. Since the data contained in these cards is static, it becomes fairly easy for fraudsters to clone it onto a new card. This is done with the help of a device known as a skimmer.
This is not possible with the chip card as the data contained within is constantly changing.
Just to give you an idea of the difficulty required to extract the data from the card, one would have to gain access to the physical chip circuit, and then manipulate things around to get the bank information.
Not only is this process highly difficult, but requires high-tech equipment which can cost more than a million dollars. Not an amount your average fraudster carries.
EMV was designed to prevent fraudulent transactions
These cards were designed with one goal in mind: to prevent fraudulent transactions whenever a fake card is swiped at a payment terminal. This has proven to be highly effective in countries where EMV is the standard.
Magnetic stripe cards project bank information into the payment terminal. Chip cards on the other hand, have encryption built into the card. Whenever the card is used at a physical terminal, (it’s a “dip” rather than a “swipe”) the communication between the two is done in an encrypted language. This way, the payment terminal knows it’s really you using the card.
Although it must be said that if chip cards are used at a point of sale which does not have chip technology enabled, you will have to resort to using the magnetic stripe on the back of the card.
With the rising popularity of EMV payment terminals in the U.S., it is time to upgrade your point of sale. Contact us now to equip yourself with the right tools to not only make your card payment process faster but also increase your potential customer base significantly.