Everything you need to know about EMV | emerchantpay

emerchantpay

7 Apr 201604:42

Summary

TLDRThe video script discusses the adoption of the EMV standard in the United States to combat card fraud. EMV, which stands for Europay, Mastercard, and Visa, is a technical authentication standard for payment cards and terminals. As of October 1st, over 120 million Americans have received an EMV card, a number expected to reach 600 million by the end of 2015. Merchants are encouraged to upgrade to EMV-compliant systems to mitigate liability in the event of fraud. The liability shift means that the responsibility for chargebacks now falls on the acquiring bank or merchant if they are not using EMV-compliant devices. EMV cards, also known as smart or chip cards, offer enhanced security through integrated circuits and can be contact or contactless. Merchants benefit from reduced fraud, streamlined administration, and familiarity for consumers accustomed to EMV transactions.

Takeaways

🇺🇸 **Adoption of EMV in the US**: American issuers have adopted EMV to counter card fraud, effective from October 1st.
🔒 **Risk Mitigation**: EMV is used to mitigate risk and prevent fraud, as well as to prepare for liability shifts.
📈 **EMV Growth**: Over 120 million Americans have received an EMV card, with a projection to reach 600 million by the end of 2015.
🛠️ **Merchant Technology Shift**: Merchants need to add new in-store technology and internal processing systems to comply with EMV.
📞 **Assistance for Merchants**: emerchantpay can help merchants navigate the EMV shift without disrupting their core business.
🚫 **Liability Shift**: With EMV, liability for fraud-related chargebacks shifts to the acquiring bank or merchant if they are not using EMV compliant devices.
💳 **EMV Compliance Liability**: The party least compliant with EMV in a transaction is liable for fraud-related chargebacks.
⛔ **Exclusions from Liability Shift**: The EMV liability shift does not apply to card-not-present transactions, lost and stolen fraud, or Visa PayWave transactions.
💡 **Smart Card Benefits**: EMV cards, known as smart or chip cards, are harder to counterfeit and can store data on integrated circuits.
🔋 **Multiple Uses for Smart Cards**: These cards can be used for data storage, authentication, user identification, and application processing.
💻 **Benefits for EMV Compliant Merchants**: Merchants with EMV compliant terminals benefit from consumer familiarity, reduced administration, fraud reduction, and multiple storage options.

Q & A

What is the EMV standard and why was it adopted in the United States?
-The EMV standard is a technical authentication standard for payment cards and the terminals and ATMs that accept them, created to counter card fraud. It was adopted in the U.S. starting from October 1st to mitigate fraud risks and protect issuers in anticipation of a liability shift.
What does EMV stand for and who are the current owners of the standard?
-EMV stands for Europay, Mastercard, and Visa, which are the three companies that originally created the standard. It is now called EMVCO and is jointly owned by Visa, Mastercard, American Express, JCB, Discover, and China Union Pay.
How many Americans have received an EMV card as of October 1st, and what is the projected growth by the end of 2015?
-As of October 1st, 120 million Americans have already received an EMV card. This number is predicted to grow to 600 million by the end of 2015.
What does the shift to EMV mean for merchants?
-For merchants, the shift to EMV involves adding new in-store technology, implementing new internal processing systems, and complying with new liability rules.
What is the liability shift in the context of EMV?
-The liability shift refers to the change in responsibility for card-present chargebacks due to fraud. With EMV, the liability now moves to the acquiring bank or merchant, depending on their use of EMV compliant devices and applications.
How does the liability shift work when there is a card-present problem transaction?
-In a card-present problem transaction, the party that is least EMV compliant is liable. If the issuer is EMV compliant but the merchant is not, the merchant is liable. Conversely, if the merchant is EMV compliant and follows the process, the liability shifts back to the issuer for fraud-related chargebacks.
What transactions are exempt from the EMV liability shift?
-The EMV liability shift does not apply to card-not-present transactions, lost and stolen fraud, or Visa PayWave transactions. In these cases, the liability remains subject to existing rules.
What are smart cards or chip cards?
-Smart cards, also known as chip cards, are a type of payment card that stores data on integrated circuits on a microchip, which is much harder to counterfeit than magnetic strips. They often retain the magnetic strip for compatibility with older payment terminals.
What are the two varieties of smart cards?
-Smart cards come in two varieties: contact and contactless. Contact cards require the cardholder to dip the card into the payment terminal slot and provide a PIN or signature, while contactless cards use a wifi logo and only require the cardholder to hold their card against the terminal to finalize the transaction.
What benefits do merchants receive from the shift to EMV?
-Merchants with EMV compliant payment terminals benefit from familiarity for consumers accustomed to EMV, reduced administration, decreased fraud through new safety features like NFC, and multiple storage options.
How can merchants ensure compliance with the new EMV standard?
-Merchants can ensure compliance with the new EMV standard by contacting their emerchantpay account executive for guidance and assistance.
What additional services does emerchantpay offer to help merchants navigate the shift to EMV?
-emerchantpay offers assistance to help merchants navigate the shift to EMV seamlessly, without interrupting their core business operations.

Outlines

00:00

💳 Introduction to EMV and Liability Shift

The video script introduces EMV, a payment card standard adopted by American issuers starting October 1st to combat card fraud. EMV stands for Europay, Mastercard, and Visa, and is now jointly owned by several major card companies. The shift to EMV involves new technology, processing systems, and liability rules for merchants. The liability shift means that if a merchant is not using EMV-compliant devices, they may be held liable for fraud-related chargebacks. The impact of this shift varies based on factors such as the use of EMV chip cards and payment terminals, the country of the transaction, and the type of card used. The liability shift does not apply to certain transactions like card-not-present, lost and stolen fraud, or Visa PayWave transactions.

Mindmap

Keywords

💡EMV

EMV is a technical authentication standard for payment cards and the terminals and ATMs that accept them. It stands for Europay, Mastercard, and Visa, and is now jointly owned by several major card companies. The adoption of EMV in the United States is aimed at countering card fraud and is a significant part of the video's theme on improving payment security and liability management.

💡Liability Shift

The liability shift refers to the change in responsibility for fraudulent transactions from the issuer to the acquiring bank or merchant, depending on their use of EMV compliant devices and applications. This shift is a key aspect of the EMV adoption process and is central to the video's discussion on how EMV affects merchants and issuers.

💡Smart Cards

Smart cards, also known as chip cards, are a type of payment card that uses an integrated circuit on a microchip to store data, making them more secure and harder to counterfeit than traditional magnetic strip cards. The video emphasizes the benefits of smart cards in the context of EMV adoption and how they contribute to fraud prevention.

💡Contact and Contactless Transactions

Contact transactions involve dipping the card into a payment terminal and providing a PIN or signature, while contactless transactions allow the cardholder to simply hold their card near a terminal to complete the transaction. The video discusses these two types of transactions in the context of smart card usage, highlighting the convenience and security they offer to consumers and merchants.

💡Fraud Prevention

Fraud prevention is a major benefit of adopting the EMV standard, as it aims to reduce the occurrence of counterfeit cards and unauthorized transactions. The video outlines how EMV technology, through its use of smart cards and authentication features, helps in mitigating fraud risks for both merchants and card issuers.

💡Authentication

Authentication in the context of EMV refers to the process of verifying the cardholder's identity during a transaction, often through the use of a PIN or signature. The video highlights the importance of authentication as a safety feature that contributes to the security of EMV transactions.

💡Issuer

An issuer, in the context of the video, is a financial institution that issues payment cards to consumers. The issuer's role is pivotal in the EMV adoption process, as they are responsible for providing EMV-compliant cards and managing the liability associated with fraudulent transactions.

💡Acquiring Bank

An acquiring bank is the financial institution that processes card transactions on behalf of merchants. The video discusses how the liability shift impacts acquiring banks, as they may now be liable for fraudulent transactions if they do not use EMV compliant devices and applications.

💡Magnetic Strip

The magnetic strip is a feature of traditional payment cards that stores data and allows for card swiping transactions. The video contrasts magnetic strip cards with EMV smart cards, emphasizing the latter's enhanced security features and the industry's move away from the former.

💡NFC

NFC, or Near Field Communication, is a technology that enables contactless transactions by allowing communication between the payment card and the terminal over a short distance. The video mentions NFC as one of the new safety features that reduce fraud and improve the convenience of transactions for merchants and consumers.

💡emerchantpay

emerchantpay is a service mentioned in the video that assists merchants in navigating the transition to EMV compliance. The company offers support to ensure a seamless integration of new technology and processes, which is crucial for merchants to maintain their operations while adopting EMV standards.

Highlights

American issuers have adopted some aspects of Europe's EMV standard to counter card fraud in the US.

EMV adoption helps issuers mitigate risk, prevent fraud, and prepare for the liability shift.

EMV stands for Europay, Mastercard, and Visa, the three companies that created the standard.

As of October 1st, 120 million Americans have received an EMV card, with a projected 600 million by end of 2015.

For merchants, shifting to EMV requires new in-store technology, internal processing systems, and compliance with liability rules.

emerchantpay can help merchants navigate the EMV shift seamlessly without disrupting their core business.

With EMV, liability for card-present chargebacks due to fraud shifts from issuers to acquiring banks/merchants based on EMV compliance.

The party least EMV compliant in a card-present transaction is liable for fraud-related chargebacks.

If the issuer is EMV compliant but the merchant is not, the merchant is liable. If the merchant is EMV compliant, liability shifts back to the issuer.

The impact of the liability shift depends on factors like EMV chip card usage, payment terminal deployment, transaction location, card type, authentication, etc.

The EMV liability shift does not apply to card-not-present transactions, lost/stolen fraud, or Visa PayWave transactions.

EMV cards, also known as smart cards or chip cards, store data on integrated circuits making them extremely difficult to counterfeit.

Most smart cards retain a magnetic strip for compatibility with older payment terminals.

Smart cards can be used for multiple purposes like data storage, authentication, user identification, and application processing.

There are two types of smart cards - contact (dipping card into terminal slot) and contactless (holding card near terminal).

Merchants with EMV compliant payment terminals can benefit from reduced fraud, familiarity for consumers, reduced admin, and multiple storage options.

For more information on EMV and its implications for businesses, merchants can contact emerchantpay's sales team.