Dipping, Tapping, or Swiping: Using EMV Chip Cards

EMV chips are becoming the credit card standard and are helping to curb credit card fraud.

As of Sept 30th, 2015, 120 million EMV chip cards have already been issued in the United States, and another 480 million are expected to be issued before the end of 2015.

EMV chips, (short for Europay, MasterCard and Visa) — are not actually new technology. Developed in the 1990’s before online retailing had a foothold, it was introduced as a solution to common problems with traditional mag-stripe cards. While the data on a magnetic strip is completely static, EMV chips are used to generate a unique code with every transaction, making duplication fraud virtually impossible. Any data collected by a card-skimmer (one of the most common forms of physical credit card fraud) becomes worthless as the unique code will register with any new attempt and freeze the transaction.

While this data method is more secure in some regards, many consumers and merchants worry that the chip won’t protect online purchases in the same way (no reader, no unique code). There is a push by consumer groups to reintegrate a PIN in conjunction with the chip as an added layer of security.

For retailers and financial institutions, the switch to EMV cards mean adding new POS technology, internal processing systems, and new liability rules. As of Oct. 1, 2015, the liability for card-present fraud will fall on the least EMV-compliant party to the fraudulent transaction — in most cases, the merchant. Only automated fuel dispensers are exempt, they don’t have to make a full shift to EMV until 2017.

For consumers, the switch means adapting to either “card dipping” or NFC payment at the POS terminal. “Dipping” isn’t as quick as the card swipe consumers are used to and will require patience from both the customer and cashier. NFC (near-field communication) cards are tapped against a compatible terminal scanner — a smoother, faster way to pay. Unfortunately, most US financial are issuing contact-only cards that require “dipping”. As most retailers are reluctant to integrate the new and fairly expensive NFC scanners, it is not seen as necessary to release NFC cards yet. Merchants that are not yet EMV-compliant can still process cards as the current EMV cards are still equipped with mag-stripe functions to ease the transition.

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