In October of 2015, the United States will officially shift from magstripe payment cards to the newer EMV chip-based cards currently available in Europe. According to emv-connection.com, 2.37 billion EMV cards already are in use worldwide. American consumers are expected to receive their chip cards throughout 2015.
But what are the specifics of these new cards? What do they do and what leads experts to say they are more secure? Randy Vanderhoof, director of the EMV Migration Forum, provides a few answers below.
What’s in use now?
In the U.S., payment cards currently have magnetic stripes containing the card holder’s account information. It’s easier to lift that information off the stripe.
“That magnetic stripe doesn’t have much protection,” says Vanderhoof. “As a result, people who commit credit card fraud are able to make duplicate copies of the data that is encoded in that stripe on to other plastic media.”
What’s in an EMV chip-based card?
Chip-based cards do away with the magnetic stripe and store the data in a microprocessor chip instead. This computer chip generates unique data that is added to the cardholder information when it’s passed through the payment processing network.
Why is this more secure?
“The added data elements…[are] called a cryptogram, a derived element that is based on other data elements that is stored on the card,” says Vanderhoof. “Only the financial institution will be able to decrypt or record what the correct information should be.”
These cryptograms are generated by the chip during a payment. This code proves to the bank that the transaction data is unique to the card in use. In practice this means that another card with that same unique pattern would be recognized as a fraud.
Not all U.S. chip-based cards will require the use of PINs, unlike the European cards. However, U.S. retailers are being required to install EMV processors that can accept PINs and PIN-less cards.
Operators should also note that not all of the issued cards will have contactless frequencies embedded either. This means that radio frequency identification (RFID) payments won’t be available in all cards.