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What is EMV?

EMV is a de facto standard for debit and credit bank cards, jointly developed by Europay, MasterCard and Visa. EMV will mean that the current magnetic stripe banking cards will be replaced with smart cards in the coming years. This change is a major one, considering there exist about 1.5 billion international debit and credit cards, and the available points of usage are in the range of 20 million.

Why EMV?

  • Decreases card fraud
  • Minimizes fraudulent usage through new identification mechanisms and distributed risk management
  • Speeds up transactions
  • Safeguards the global universal interoperability for payment smart cards
  • Utilizes the multi-application capability of smart cards in a standardized way
  • Enables universal terminal functions and safeguards quality of
  • terminals
  • Specifications are made available and open for anyone
  • Increases safe and secure self-service possibilities
  • Enables new business opportunities (e.g. network and mobile services)

What does EMV mean in practice?

EMV brings the following new properties to a debit/credit transaction:

  • Terminals can also verify the card securely in offline mode with no real-
  • time connection to the issuing bank
  • Versatile risk management options
  • Cardholder’s PIN verification also at the retailers end
  • Transaction authentication
  • Mutual authentication between the card and the card issuer in online mode
  • Card data update possibility in online mode

The card is significantly more secure when compared to traditional technology. The most visible change from the cardholder’s perspective is that he/she is verified by the PIN code of the card not only at the ATM but also at retailers end. This means that the traditional manual signing of the receipt or personal identification is no longer necessary. The cardholder can simply insert the card into the terminal, select the mode of payment and accept the payment. The new procedure also simplifies a cashier’s task.

EMV specifies both debit and credit applications on the smart card. Banks also have a need for this more multi-faceted card, made possible by the decision to implement EMV on smart cards. EMV has further advantages, having been built to enable the multi-functionality and multi-applications which it holds. Typically, these include a stored value or loyalty, as well as identification schemes.