EMV (Chip Card)

What EMV is

EMV is a global set of technical specifications for chip-card payments and the terminals that accept them. The initials come from Europay, Mastercard and Visa, the companies that developed the standard. EMVCo maintains the specifications and related testing and approval processes.

An EMV card has an embedded microchip and usually also a magnetic stripe for older terminals. The chip provides security features that a stripe transaction does not, including generating a unique, one-time code for each chip transaction.

EMV does not cut your rate, but accepting chip cards helps protect you from counterfeit-fraud liability.

How a chip transaction works

At checkout, your customer inserts the card into an enabled terminal and follows the prompts. The chip and reader exchange transaction information, and the chip generates a one-time cryptogram. The code helps authenticate the card and cannot be reused for another transaction.

The transaction is generally sent to the card issuer for authorization. The issuer checks whether it can be approved, including whether the cardholder is permitted to make the payment and has available credit or funds. EMV supports in-person chip payments, including contact and contactless acceptance when your terminal is enabled for them.

What EMV means for your business

You need an EMV-capable, enabled payment terminal to accept chip cards. A terminal with a chip reader may need configuration, while older equipment may need replacement. The research does not establish a standard equipment price, so compare the actual hardware and setup charges in your proposal.

EMV helps reduce counterfeit card fraud at the point of sale, but it does not prevent every type of fraud or automatically lower your processing rate. It is a security measure, not a discount. Your card-processing costs still include interchange, network fees and processor markup.

EMV and counterfeit-fraud liability

The U.S. EMV liability shift took effect in October 2015 for most in-person merchants. For counterfeit-card transactions, the party using the less secure technology bears the loss. If you accept a counterfeit card by swiping its stripe when a chip transaction was available, your business can be left with the fraud liability.

Automated fuel dispensers had a later shift date, October 2020. The shift is about counterfeit fraud, not a blanket transfer of responsibility for every disputed or unauthorized payment. EMV does not eliminate the need to review suspicious transactions and follow your dispute response deadlines.

What you can actually change

1. 01
   Test chip acceptance. Run a chip transaction on each checkout terminal and confirm it prompts the customer to insert the card. A reader that is present but not enabled does not provide chip acceptance.
2. 02
   Review equipment charges. Separate hardware, setup and monthly equipment charges in any terminal proposal. EMV itself does not create a processing-rate discount.
3. 03
   Keep a fallback plan. If a chip reader fails, follow your payment procedures for the alternate method and record the issue. A stripe fallback does not provide the same chip-based counterfeit protection.

Frequently asked questions