Then, there are the enhanced, highly secure validation and card The chip is designed to securely store cardholder data and carries security credentials that have been encoded into it by the issuer with user-specific “keys.” Encoding the credentials this way makes it difficult, if not impossible, for fraudsters to create counterfeit cards. One reason this is so is the chip itself. The way in which chip card transactions are processed enables them to prevent card fraud in a way that is completely impossible with traditional magnetic stripe cards. The ‘Why’ (More Details About Chip Card Processing) An online authorization request and authorization are completed, and the transaction is finalized. Once the fact that the cardholder possesses sufficient open credit or checking account funds to cover the transaction has been verified, the terminal requests approval and approval occurs either online or offline.
The transaction and the chip are confirmed, and cardholder verification is done using a PIN, a signature, or cardholder verification method (CVM). The terminal reads the data from the application, and the data is authenticated to ensure that the card is not counterfeit. Next, the card application is selected it’s important to note that chip cards can run multiple applications-for example, local debit and Visa credit. After the transaction is initiated by the POS terminal, contact between the card and the card reader is established in contact or contactless mode depending on the type of card (contact, contactless, or dual-interface). The ‘How”Ĭhip card processing involves multiple steps. They communicate with the card by touching its plate or in RF mode. Dual-interface cards incorporate contact and contactless technologies. Contactless cards have an antenna and communicate with the card reader via radio-frequency (RF) technology.
Contact between the card and the plate is usually made by inserting the card into a slot in the terminal (or ATM). Contact chip cards communicate with a card reader over a contact “plate” that must touch the terminal in order to be processed. They come in three “flavors”: contact, contactless, and dual-interface. The ‘What’Ĭhip cards are cards into which a microprocessor chip has been embedded. However, weĬan’t be too clear about chip cards, how they are processed, and how theyĭiffer from magnetic stripe cards. Liability for fraudulent transactions by accepting chip cards. So, too, have merchants that want to avoid as of December 2017, 58.5% were chip cards, up from 52.2% as of December 2016 and 26.4% as of December 2015.Ĭonsumers have come to favor chip cards because Of all credit and debit cards issued in the U.S. transactions executed using chip cards, rather than traditional magnetic stripe cards, rose from 18.6% for the period spanning January through December 2016 to 41.21% for the period spanning January through December 2017. According to EMVCo, the percentage of U.S. Consider statistics from EMVCo, the body that handles point-of-sale (POS) equipment testing, certification, and other processes related to EMV. There’s no question that EMV and the use of chip cards is taking hold in the U.S. On that date three years ago, liability for fraudulent card-present credit and debit card transactions shifted from card issuers to merchants, unless these merchants have implemented point-of-sale technology that accommodates the EMV (Europay/Mastercard/Visa) standard and, as a result, accepts transactions completed with chip cards.