EMV - Europay, Mastercard and VISA

You may have heard the initial EMV and be wondering what does that stand for?  It stands for Europay, MasterCard and VISA.  The three financial institutions worked to put together a standard for an EMV card.  An EMV smart card is a plastic card with at least one embedded integrated chip that will process data and comply with the EMV technical standards.

You may have heard the phrase Chip and Pin used along with or interchangeably with EMV.  Actually Chip and Pin is a type of EMV card that uses a personal identification number to identify the cardholder when the transaction is taken offline.  Since nearly all transactions today, in the U.S., are taken online the EMV cards they may be authenticated by other means such as a signature.  Please take note that Visa has announced plans to institute a liability shift in the U.S. for October 1^st 2015 for locations and processors that are not prepared to accept the EMV secure cards the paragraph below was taken from the Visa Bulletin of August 9^th 2011 which can be view in entirety at this web site: http://usa.visa.com/download/merchants/bulletin-us-participation-liability-shift-080911.pdf

Visa’s Counterfeit Liability Shift Policies

Visa intends to institute a liability shift in the U.S. for domestic and cross-border counterfeit transactions effective 1 October 2015. Visa’s global POS counterfeit liability shift policies are designed to encourage EMV chip card issuance and acceptance in participating geographical regions, effectively creating a more secure environment for transactions within and between each participating Visa region. Note: The liability shift encourages chip transactions because any chip-on-chip transaction (i.e., a chip card read by a chip terminal) provides dynamic authentication data, which helps to better protect all parties.

With this type of liability shift, the party that is the cause of a chip-on-chip transaction not occurring (i.e., either the issuer or the merchant’s acquirer) will be financially liable for any resulting card-present counterfeit fraud losses. When a transaction occurs using chip technology, any liability for counterfeit fraud, though unlikely, would follow current Visa Operating Regulations.

The policy assigns liability for counterfeit fraud to the party that has not made the investment in EMV chip cards (issuers) or terminals (merchants’ acquirers). The policy encourages wider deployment of EMV cards and terminals.